David Marshall, Partner
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1. Overview
Care cost claims have rocketed over the past decade. The compensation awarded to claimants for this aspect of their personal injury claim has increased to reflect higher hourly rates (following the knock on effect of improved pay settlements for NHS staff and shortages of skilled staff) and increased life expectancy.
It is not therefore surprising that insurers have turned to looking for contributions to those costs with a view to reducing the bill. Their (so far limited) successes have come from microscopic textual analysis of the rather convoluted requirements for local authority provision as set out in statute and subsidiary legislation. As we shall see, the practical impact is likely to be limited in most cases, but it is important for both sides to be aware of the issues in cases which may be affected.
2. Damages for care at common law
The general principle in tort is of course to put the party that has been injured in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation (e.g. Wells v Wells [1998] UKHL 27).
In Sowden v Lodge [2004] EWCA Civ 1370 the claimant was severely disabled having suffered a catastrophic brain injury in a road traffic accident and was a resident in local authority accommodation.
She had been found 50% contributory negligent and therefore could not have afforded all of the items and care which had been contended for as only half the cost would be recovered. The Court considered Section 1 of the Law Reform (Contributory Negligence) Act 1945and concluded:
“Damages are to be reduced having regard only to the "claimant's share in the responsibility for the damage". That assumes an assessment of the sum recoverable prior to any reduction for contributory negligence. Sub-section 1(2) points strongly in the same direction. The reduction takes account of share of responsibility for the damage but not how the damages are likely to be spent.”
So, the fact that a Claimant could not afford to take up all of the care costed in a schedule and in principle allowed by a judge was not a reason for disallowing it in its entirety.
The trial judge had determined that in was in her ‘best interests’ to remaining local authority care, but with privately funded ‘top up care’.
The court considered the previously unreported Court of Appeal decision in Rialis v Mitchell (unreported, 6 July 1984)and quoted from Stephenson LJ’s judgement in it with regard to the provision of institutional care:
“what has to be first considered by the court is not whether other treatment is reasonable but whether the treatment chosen and claimed for is reasonable”.
In Sowden, Longmore LJ held that:
“the correct question to be addressed in relation to the care element of the claim is ‘What is required to meet the Claimant’s reasonable needs.’
So it is not the ‘best interests’ of the Claimant as:
“paternalism does not replace the right of a claimant, or those with responsibility for the claimant, making a reasonable choice” [per Pill LJ in Sowden]
3. Medical costs - healthcare
So far as any argument about using NHS provision rather than private is concerned, the situation is clear. Section 2 of the Law Reform (Personal Injuries) Act 1948 provides that:
‘In an action for damages for personal injuries … there shall be disregarded in determining the reasonableness of any expenses, the possibility of avoiding those expenses or part of them by taking advantage of facilities available under the National Health Service Act 1977.’
And in Eagle v Chambers [2004] EWCA Civ 1033 the Court of Appeal quoted the agreed summary:
"The effect of this provision has been considered judicially a number of times. The authorities establish that the Act is to be regarded as preventing a tortfeasor from raising an argument that because facilities are available on the NHS it is unreasonable to allow the, higher, costs of obtaining goods and services privately.
(See Harris v Brights Asphalt Contractors Ltd. [1953] 1 Q.B. 617: Cunningham v Harrison [1973] Q.B. 942 and Lim Poh Choo v Camden [1080] AC 174)
The question thereafter becomes one of fact: who will provide the services. If the answer is that the claimant will purchase goods and services privately then it is no answer that the claimant could obtain them under the auspices of the N.H.S. more cheaply. If the facts establish that the claimant will obtain goods and services freely under the auspices of the N.H.S. then the cost of obtaining them privately will not be allowed.”
So, just as the cost of private surgery can be recovered provided that it can be established that the Claimant will use this rather than the NHS, the cost of long-term care in a private hospital can be recovered.
The NHS is not entitled to charge for healthcare services. Local authorities are not
permitted to provide nursing care (Health and Social Care Act 2001). Direct payments from a local authority can be applied by the Claimant towards a private care regime. However, the same does not apply to NHS contributions to private healthcare regimes. Complications can arise relating to pooled arrangements between NHS and Local Authority which are encouraged by the government and although the Local Authority cannot provided nursing services, it appears that the NHS can delegate such provision to a Local Authority.
The distinction between nursing care and personal care is tricky (see R v North and East Devon HA ex p Coughlan where the court posed the question of whether the ‘primary need’ is health care or social care, and also the published guidance is equally unclear). This has caused public disquiet outside the field of personal injury litigation (e.g. the elderly will not have to contribute to cost if it is an NHS ‘healthcare’ service, they may have to contribute if it is local authority ‘social care’ service). For obvious budgetary reasons, the NHS is reluctant to fund ongoing healthcare.
4. Local authority community care
There is a vast number of statutes, regulations, directions and guidance, some very old, which inter-link in this area. Some provisions incorporate specific duties to provide services which can be relied upon directly by individuals. Some merely provide targets that are general aspirations. The law is totally unsatisfactory. As Scott Baker LJ said in Sowden v Lodge [2004] EWCA Civ 1370:
“It seems to me that only by legislation can any rationality be brought to this problem. Meanwhile the Courts have to do their best to keep the anomalies to a minimum”
A Local Authority is obliged to make an assessment of needs of apparently disabled persons under section 47 of the NHS and Community Care Act 1990:
"… Where it appears to a local authority that any person for whom they may provide or arrange for the provision of community care services [which includes services to be provided under Section 21 of the 1948 Act] may be in need of any such services, the authority –
(a) shall carry out an assessment of his needs for those services; and
(b) having regard to the results of that assessment shall then decide whether his needs call for the provision of them by any such services".
The purpose of the assessment was not of course to enable tortfeasors to reduce their liability to pay compensation, but to ensure the rights of disabled persons (most of whom do not have the right to third party compensation) to access state provision. However, insurers will ask claimants to seek such an assessment and will usually try to argue failure to mitigate if this is not done. Sadly, most local authorities have limited funds, make basic provision only and do not welcome applications for use of such funds, particularly by those who can afford to pay for services privately, whether from their own resources or from a third party tort claim.
Two provisions of the National Assistance Act 1948 are key. Section 21 of the 1948 Act relates to the provision of residential accommodation (and necessary services) which can include local authority homes and other premises for which the local authority makes a direct payment.
"(1) Subject to and in accordance with the provisions of this Part of this Act, a local authority may with the approval of the Secretary of State, and to such extent he may direct shall, make arrangements for providing –
(a) residential accommodation for persons aged 18 or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them."
Under section 22 of the Act the authority has a power to charge for s21 services, but must not do so where the Claimant’s only asset is a personal injury damages trust and other local authority provision(National Assistance (Assessment of Resources) (Amendment) Regulations 1998). This was presumably to bring this into line with the treatment of such trusts for other benefits purposes, Longmore LJ in Sowden reflecting:
“I did occasionally wonder during the hearing whether it was really the intention of the draftsman of the 1998 regulations not merely to ring-fence an award of damages, once made, so as to ensure that such award should be unavailable to local authorities providing or paying for care services to a claimant but also to achieve the result that, because no claim to recoup themselves from such an award could be made by local authorities, a defendant tortfeasor was to be under no liability to compensate a claimant for the cost of such care services.”
Considerable guidance, although not particularly helpful, has been published as to how the section 21 duty should be exercised (e.g. National Assistance Act 1948 (Choice of Accommodation) (Amendment) (England) Directions 2001)
In Sowden the Court of Appeal held:
“the judge was entitled on the evidence to conclude that it was "in the interests of the claimant to have a residential arrangement". His assessment of the evidence was conspicuously clear and fair. His conclusion that a residential arrangement was appropriate was firmly stated and convincingly reasoned. He saw positive advantages for the claimant in living at a residential home.”
They did express some concern as to how the top up care regime would operate in practice and there was a limited remission back to the Judge for clarification. In this connection, the comments of Cox J in Heale v Queen Mary’s Sidcup NHS Trust [2003] EWHC 1471 QB are of interest:
“In any event, there would be obvious practical difficulties in both organising and operating what would be two separate, overlapping regimes … I would have considerable doubts as to its success in practice”
In general terms though, the Court concluded:
“the approach is to compare what a claimant can reasonably require with what a local authority, having regard to uncertainties which almost inevitably are present, are likely to provide in the discharge of their duty under Section 21. If the second falls significantly short of the first, as Owen J found in Crookdale it did, the tortfeasor must pay, subject to the argument raised in both cases that Section 21 provision augmented by contribution from the tortfeasor meets the reasonable requirements. If it is the statutory provision which meets the claimant's reasonable requirements, as assessed by the judge, the tortfeasor does not have to pay for a different regime”
but “in making the comparison a court may have regard to the power to compel a local authority to perform its duties”. In the conjoined appeal of Crookdale, the Court rejected the Defendant’s appeal against their having to pay the full cost of a privately funded care regime on the grounds that this would have to be funded by the local authority, as it had not been showed that the local authority regime was appropriate nor that top up was workable.
Section 29 of the National Assistance Act 1948 relates to domiciliary care, the provision of services to the Claimant in his own home. Similar considerations apply as under section 21, but are arguably more nebulous than the duties relating to residential care. Also unlike section 22 of the National Assistance Act 1948 (applying to s 21 accommodation) which imposes a duty to assess means and charge, the power to charge for s29 domiciliary care services is now dealt with under section 17 Health and Social Services and Social Security Adjudication’s Act 1983 (HASSASSA) which provides that charging is discretionary and the amount is what the authority considers to be reasonable.
In Freeman v Lockett [2006] EWHC 102 QB the Claimant was spinally injured but was not a patient. Pending the trial, the Claimant had been receiving financial assistance from the local authority towards the cost of care in her own home. There was an indication from the authority that after settlement the local authority would want require the Claimant to contribute to the future costs and would want to recover its past outlay from her. But just before trial, this decision was reversed.
Tomlinson J held that no local authority could ever guarantee its future policy for supply of care. It was unnecessary and impossible for the court to estimate how much the local authority might pay in future towards care. The Defendant had failed to prove that the authority would fund care in the future. He distinguished the case from Sowden as the Court in Sowden had been specifically considering section 21 duties.
However, in Crofton v NHSLA [2006] Lloyd's Rep Med 168 HHJ Reid QC reached the opposite conclusion and determined that the local authority would meet the claimant’s reasonable needs by meeting domiciliary care needs in the future. This decision is under appeal and the court will no doubt clarify the extent to which Sowden applies to domiciliary care provision under section 29.
There may also need to be further clarification with regard to payments made under section 45 Health Services and Public Health Act 1945 (meals, recreational services and travel assistance provided to elderly people), under section 2 of the Chronically Sick and Disabled Persons Act 1970 (practical assistance in the home and recreational facilities outside the home), under the ‘Supporting People’ grants (Local Government Act 2000 section 93 and the Supporting People (England Directions) 2005) or from the Independent Living Fund (Disability Grants Act 1993) although the sums involved and their more discretionary nature may mean these sources are less significant..
Where section 117 Mental Health Act 1983 (care in the community legislation relating to mental health patients) applies the obligations on a health authority to provide care and accommodation are different to the duties of a local authority under the National Assistance Act 1948. In particular, the authority’s resources can be taken into account in determining provision. The section was considered in Tinsley v Sarkar [2005] EWHC 192 (QB) where the Court held:
“In my judgment section 117 imposes on health authorities a duty to provide after-care facilities for the benefit of patients who are discharged from mental hospitals. The nature and extent of those facilities, must, to a degree, fall within the discretion of the health authority, which must have regard to other demands on its budget…Thus resources are not irrelevant”
So although there was a duty on the authority to provide care free of charge and without recoupment, the fact that resources can be taken into account meant that on-going provision could not be assured and so private provision was allowed for.
And so far as children are concerned, section 17 of the Children’s Act 1989 applies. There is no duty to provide for individual children and the authority is entitled to charge for the care provided. In R (Spink) v Wandsworth (which related to property adaptations where there was no third party claim) the Court of Appeal held:
‘As a general proposition a local authority can reasonably expect that parents, who can afford the expense, will make any alterations to their home that are necessary for the care of their disabled children, if there is no alternative source of providing these … we agree with Richards J. that a local authority can, in circumstances such as those with which we are concerned, properly decline to be satisfied that it is necessary to provide services to meet the needs of disabled children until it has been demonstrated that, having regard to their means, it is not reasonable to expect their parents to provide these.’
So the position for children is different than for adults because the parents’ means might be taken into account, even though the personal injury trust is disregarded. It therefore seems less likely that any challenge to rely upon local authority contributions will succeed in child cases.
5. Burden of proof
It is certainly not enough for the Defendant to seek a global reduction in the award for future care to reflect the possibility of local authority contribution. In Sibbons v Atkins [2005] EWHC 443 QB a 20% global reduction was rejected by Nelson J and a similar approach was rejected by Tomlinson J in Freeman as “utterly unsatisfactory and unprincipled”
In Godbold v Mahmood [2006] EWHC 1002 QB an argument that when family care was no longer available free local authority would be available and should used was rejected by the Judge who pointed out that he had:
· no evidence before him of the local authority’s criteria
· no evidence of their present or future resources for such purpose
· no evidence as to how in practice the statutory duty was discharged (the Defendant’s expert’s ‘gut feeling’ being insufficient)
· his own experience in the Administrative Court of ‘reluctance’ by local authorities to discharge such duties
· no evidence as to the sort of accommodation the local authority would provide or the amount they would be prepared to pay
· no confidence that the current duty would remain unchanged in the future (particularly as it was imposed by a combination of primary legislation and ministerial direction)
· a suspicion that increasing claims by the elderly for scant local authority resources would lead to pressure on ministers by local authorities to water down other calls on their resources.
Conversely, in Crofton v NHSLA HHJ Reid appears to have placed great store on the local authority’s evidence of their practice and their acceptance that they had a duty to fund without charge.
In Sowden the Court held that the burden of proof is not on the claimant to show that the local authority provision may not be adequate. It is for the Defendant to show that the Local Authority provision does meet the Claimant’s reasonable needs. If they accept some parts do not, the Defendant should set out the extent to which the accept this. Pill LJ said:
“While claimants, and those advising them, must be expected to co-operate with local authorities discharging their statutory duties, they claim in the action that to which they believe the claimant is entitled and there is no legal burden on them first to disprove that statutory provision will be adequate. It may of course be prudent to call evidence, as in any situation where a judgment upon the facts is to be made, as to why statutory provision is inadequate”….
What emerges from the present cases is the importance, when dealing with cases involving very serious injuries, of placing before the court cogent evidence as to how the regimes proposed by the parties for the care and accommodation of claimants will operate…. Judges trying this type of case should not be put in the position the judge, in Sowden, was. Whatever is proposed should be particularised and costed in the schedule (or counter-schedule) of damages. When issues arise, efforts should be made to define and narrow them in advance of the hearing.
When local authority residential care with top-up is proposed, whether as a primary or a fall-back position, the basis on which it is put forward should be explained in writing as should any attack upon its feasibility and suitability. The issues raised in the present appeals have not turned on a detailed consideration of the 1992 Directions but their effect, and that of guidance given with them, may well require consideration in future cases. The expression top-up now appears in paragraph 4 of the September 2003 guidance. The concept was present in paragraph 8 of the 1992 guidance, though not cited by either judge; presumably because of concessions made”.
In Walton v Calderdale [2005] EW 1053 (QB) Silber J rejected the Defendant’s argument that from age 19 the periodical payments for care to the claimant (who was 9 at the trial) should be reduced to take account of the likelihood of available local authority care. It is fair to say that the Judge was not sympathetic to the Defendant Trust who also argued that the periodical payments should also be reduced because of a Treasury ‘Value for money’ guidance which was not produced to the Court, nor had it been seen by Counsel. In addition, notwithstanding the Defendant’s argument about care from age 19, no evidence as to this had been adduced. Nor had an indemnity against any future failure of the authority to pay been offered by the Trust. The Judge held that the Claimant had established that her reasonable needs were met by the payment of £50,548.90 pa with RPI increases. The onus is on the Defendant to show that this should be reduced by costs paid by a local authority or care provided by them. This required evidence to be adduced. However, the Judge went on to also say even if the Defendant had adduced cogent evidence and thus shifted the onus to the Claimant to show that the local authority could not wholly or partly satisfy his reasonable needs, the Claimant may well still have succeeded in doing so because “there is a strong prospect that by the time the Claimant reaches the age of 19 in July 2014 and thereafter local authorities might well be applying a means test before giving any care benefits to disabled people.” This is a clear indication that many judges will need an awful lot of persuading that it is safe to cut the Claimant’s damages because the local authority will provide for reasonable care needs for 40, 50 or more years into the future.
6. Indemnities
Sometimes Defendants seek, usually by way of compromise, a promise by the Claimant to seek direct payments from the local authority and to account back to the tortfeasor for sums recovered by way of mitigation of the principal obligation of the tortfeasor to pay fully compensatory damages (see Thacker v Steeples). Alternatively, the tortfeasor might give an indemnity promising to make good any shortfall if the local authority provision ceased or reduced (Harden v Chesters). It appears that neither option could be imposed by a court. It can, of course, be agreed and incorporated in a Tomlin Order. Insurers are often unhappy to agree this because it may require a reserve to be left open indefinitely. Such considerations should not apply to the NHS.
In Freeman the Court was clearly unimpressed with the Defendant’s failure to offer an indemnity to pay instead if funding ceased – as the Judge said, they sought to put the full risk onto the Claimant. Similarly in Walton v Calderdale where the Judge commented that an indemnity had not been offered.
7. Practical steps
Defendants
So far as the Defendant is concerned, the onus is on them to prove that local authority funding is a practical alternative to meet the claimant’s reasonable needs. If they cannot adduce evidence of this then the case-law shows that the attempt will fail. It follows that at an early stage information in appropriate cases should be gathered. However, this evidence gathering exercise should not be confused with expectation of success. The evidence will need to be considered carefully and it will only be in rare cases that local authority care will meet reasonable needs. The case-law suggests Judges will take a great deal of persuading that it is right to transfer the risk for the future from the wrongdoer to the claimant. Even gathering and considering will generate additional costs. Do not waste time with medical costs (where s 2(4) will apply) or cases where the claimant is obviously going to live in their own premises and obviously has capacity and will prefer to control their own regime.
Consider offering an indemnity? Although it may not be ordered by the Court, an offer of indemnity, combined with evidence about local authority provision, may persuade a judge that the indemnity offer has been unreasonably refused and that the claimant has refused to mitigate.
Claimants
So far as Claimants are concerned, the Claimant should not refuse to co-operate with enquiries.
“claimants, and those advising them, must be expected to co-operate with local authorities discharging their statutory duties” [Sowden per Pill LJ]
If they do not co-operate, then, firstly, there is a danger of undermining the inherent sympathy of the judge. Secondly, the court can probably order that access be given – probably by way of ordering a stay as with a refusal to consent to disclosure of relevant medical records. Now that the onus is on the defendant to prove the local authority can meet the claimant’s reasonable needs, a court must surely allow them to gather the evidence.
But do not panic or over-react to the evidence gathering exercise.
In any event, particularly in cases where liability is in dispute and an interim payment will not be made, the claimant may need local authority support to improve quality of life.
The claimant’s adviser has the advantage of knowing the particular circumstances of the claimant and also has a control over timetable before proceedings are commenced. They are therefore in a good position to consider such points well in advance.
If a claimant has capacity, it will be difficult for the Defendant to sustain an argument for use of local authority provision unless the claimant wants this. However, evidence should be obtained from the claimant and his/her family particularly as to his/her pre-accident family situation (e.g. access to partner, children, relatives and friends in an environment that is close to that which existed pre-accident).
Evidence should also be obtained as to post-accident insight, capabilities, wishes and need for support. This will include medical and other expert reports. An evaluation of the reasonable need for private provision, if this is contended for, will need evidence supporting it. This will need to be re-assessed, particularly if a care or treatment regime is instigated on an interim basis.
Accommodation is key (as we have seen, it is the s21 NAA 1948 duty which is likely to be the critical one). So evidence as to present accommodation (private or public sector) and the claimant’s needs is critical.
The following scenarios are possible:
· Temporary state accommodation (e.g. a rehabilitation half way house): the question in fact should relate to the suitability or otherwise of the permanent accommodation ultimately proposed.
· If permanent private accommodation is unsuitable and cannot be adapted, it is unlikely that a Court will expect a Claimant to enter into convoluted negotiations with a local authority where a claim for suitable accommodation can be made in the tort proceedings. There can be no guarantee that the local authority will in fact fully fund a new property permanently.
· If permanent private accommodation is unsuitable at present but can be adapted, the power to do so arises under section 2 Chronically Sick and Disabled Persons Act 1970. There is no duty on the local authority to do so, and they may charge.
· If permanent state accommodation is provided, but the claimant/family wish to move, evidence must be obtained as to why and how it does not meet reasonable needs. Also ask whether the provider can guarantee that the present accommodation will be available permanently?
· If the permanent state accommodation is provided and the claimant wants to stay, consider any necessary adaptations and any top up regime that is appropriate.
8. Some conclusions
The law is complex and subject to change. Considerable costs can be run up arguing about issues which are presently only likely to apply in a small minority of cases.
The principle in Sowden that local authority care provision (with or without top up care) may meet ‘reasonable needs’ has given this issue considerable impetus.
However, if this becomes more prevalent, it seems likely that the government will act. It will not allow tortfeasors to transfer cost back to the taxpayer, at a time when other demands have placed pressure on these scarce public resources. Even with a change of government, it is difficult to see how an increased use of public resources by tort victims could be justified or funded. It is submitted that the more likely outcome would be:
“It might be thought that it would be more appropriate for legislation to provide that both National Health Trusts and local authorities could recover the costs of medical expenses and care respectively from the tortfeasor as the Law Commission recommended (at any rate in relation to medical expenses) in 1999.” [per Longmore LJ, Sowden].
Bearing in mind the government’s abject failure to deal with the myriad of Law Commission recommendations on dam
For further information email David Marshall or call 020 7940 4000.
