Effects of the new damages threshold, proposed by The Department of Health
Last week the Department of Health announced that it would seek to introduce fixed recoverable costs for clinical negligence cases with damages worth up to £25,000. The government had been expected to consult on the plan since summer 2015, with the initially proposed damages threshold being £250,000.
The announcement is described as a victory for Claimant Solicitors by many, yet the decision is reported to also save the NHS £45m a year by 2020/21. It appears that the consensus among Solicitors is therefore that £25,000 is the right level to introduce fixed recoverable costs to clinical negligence cases.
The level of fees proposed by the consultation however may be of concern. There are five options that the consultation puts forward:
Option 1 – Staged Flat Fee Arrangement
- Pre-issue: £3,000;
- Post-issue/pre-allocation: £3,900;
- Post-allocation/pre-listing: £5,650;
- Post-listing: £7,150;
- The recoverable amount would be fixed irrespective of settlement value.
Option 2 – Staged Flat Fee Arrangement Plus % of damages
- Pre-issue: £1,500 + 10% of damages;
- Post-issue/pre-allocation: £3,000 + 10% of damages;
- Post-allocation/pre-listing: £6,000 + 10% of damages;
- Post-listing: £6,500 + 10% of damages.
Option 3 – Early Admission of Liability Arrangement
The flat fee rates used for option 1 are reduced by 10% in cases where the defendant makes and early admission of liability.
Option 4 – Costs analysis approach
This proposal is based on the mean relationship between current costs and damages using data from costs lawyers who deal with claims against the NHS.
The illustrative rates are:
- Pre-issue: £3,080 plus 19% of damages (capped at £7,830);
- Post-issue/pre-allocation: £5,920 plus 34% of damages (capped at £14,420);
- Post-allocation/pre-listing: £11,560 plus 38% of damages (capped at £21,000);
- Post-listing: £10,320 plus 47% of damages (capped at £22,070);
- Costs will be subject to a 12.5% London weighting.
There is a further option for an alternative proposal, which is the fifth option.
The level of fees is not the only concern for Claimant Solicitors. Obstructive behaviour from Defendants can often result in costs escalating, meaning that cases will be virtually impossible to run if costs are fixed. Thus the proposal of Option 3 can essentially be seen as an effort to incentivise Defendants to exchange information and make an early admission of liability when appropriate.
In addition, some clinical negligence cases that attract relatively low value damages may still be highly complex and important cases that are not suitable for fixed recoverable costs. For example claims brought by elderly patients with a shorter life expectancy, claims for stillbirth and other fatal claims may attract damages less than £25,000, yet they can still be very complex and delicate cases requiring expertise beyond the norm. After all the value of any money involved is just one of the eight factors to be taken into account in deciding the amount of costs at CPR 44.4(3).
It is important that these claims are still brought and taken on by Claimant Solicitors in order to preserve access to justice as far as possible. The consultation asks Solicitors for a response as to their views on the exemptions that should be made to the fixed recoverable costs scheme by 1 May 2017.
There are therefore genuine concerns that remain following the announcement of the government’s plans, however the decision to limit the damages threshold to £25,000, as opposed to the originally suggested figures proposed by the Department of Health in summer 2015, is a step closer to alleviating the legitimate concerns regarding access to justice in clinical negligence cases.
Written by Tyler McEwen - Costs Draftsman
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