On 31 January 2022 the Department of Health and Social Care published a consultation document setting out its proposals to introduce mandatory fixed recoverable costs and a new “streamlined” process for lower value clinical negligence claims.
The below article sets out the background to, aims of and rationale behind that document before summarising the key proposals contained within it. As will be seen, these proposals, if implemented, are likely to have a significant effect on those practising in this area and on their clients.
In 2017 the Department of Health and Social Care (“DHSC”) published a consultation, ‘Introducing Fixed Recoverable Costs in Lower Value Clinical Negligence Claims’, which sought responses to its proposals to introduce: (a) fixed recoverable costs (“FRC”) for clinical negligence cases where the damages were valued at between £1,000 and £25,000 in England and Wales; and (b) a draft set of procedural rules which would apply to such claims.
The DHSC published a summary of responses to that consultation in 2018. The same year, Sir Rupert Jackson published his report on civil litigation reform, which recommended the Civil Justice Council (“CJC”) should develop proposals for a streamlined clinical negligence FRC scheme. Later that year, the DHSC and the Ministry of Justice (“MoJ”) jointly commissioned the CJC to prepare a report outlining such proposals. The CJC’s report was published in October 2019.
The DHSC contends that the proposals set out in its consultation document published on 31 January 2022, ‘Fixed recoverable Costs in Lower Value Clinical Negligence Claims: a Consultation’ (“the consultation document”) are “closely aligned” with those contained within the CJC report and that they “recognise all the concerns raised” in the responses to its previous consultation in 2017.1
The stated aims of the proposals are to create a scheme which processes lower value clinical negligence claims more efficiently and cost-effectively (i.e. in a shorter time for lower legal costs).2
The rationale behind these aims given in the consultation document is that, over recent years, the time taken to resolve lower value clinical negligence claims and the amount of legal costs awarded to claimants in respect of such claims have both increased to a level which is disproportionate to the (relatively low) complexity and value of such claims.3
The consultation document cites a number of statistics in support of these contentions. For example, in terms of the time taken to resolve claims, lower value clinical negligence claims settled in 2020/21 had an average claim duration (the time taken from claim notification to settlement) of 1.3 years, an increase of 46% since 2010/11.4
Further, total legal costs (claimant and defendant) of all clinical negligence claims have increased from £152 million in 2006/07 to £582 million in 2020/21.5 For lower value clinical negligence claims, the average claimant legal costs per claim doubled from £10,121 in 2006/07 to £22,124 in 2020/21 and the average claimant legal costs per claim in 2020/21 were more than four times those of the average defendant legal costs per claim.6
However, in contrast to the above – which some have argued undermines that rationale – the consultation document also cites statistics which indicate that average claimant legal costs have remained broadly stable between 2016/17 and 2019/207 and research in 2019 which indicated such costs had reduced following the Legal Aid, Sentencing and Punishment of Offenders Act 2012.8
Summary of Key Proposals
The key proposals set out by the DHSC in the consultation document are summarised (in chapter 5 of the document) under the following headings and sub-headings:
- the introduction of a streamlined process for lower value clinical negligence claims:
- claims that would fall within the scheme;
- a twin track approach; and
- streamlined processes for standard track and light track claims;
- fixed costs, exclusions, sanctions and implementation:
- fixed costs;
- mandatory neutral evaluation;
- excluded claims;
- sanctions to encourage adherence to the scheme; and
- implementing the FRC scheme; and
- reviewing the upper limit for claims.
Further detail in resect of each of the above proposals is set out in the subsequent chapters of the consultation document.
Claims that Would Fall Within the Scheme (Chapter 6)
Chapter 6 of the consultation document defines claims which would fall within the FRC scheme, viz., lower value clinical negligence claims, as claims where the value (of damages based on a final settlement or judgment value) is in excess of the small claims limit for non-road traffic accident personal injury claims,9 up to £25,000.
A Twin Track Approach (Chapter 7)
The DHSC proposes that there should be two separate tracks for lower value clinical negligence claims, a standard track and a light track.
The standard track would be the appropriate track for clinical negligence claims which are neither dealt with on the light track nor excluded under the exclusions set out in chapter 11 of the consultation document – i.e. it would be the appropriate track for contested (but not excluded) lower value clinical negligence claims.
The light track would be the appropriate track for lower value clinical negligence claims which are “straightforward” as either liability is not in dispute (which is likely to account for the majority of claims that would fall to be dealt with on this track) or (less likely) the parties agree that (even though liability is in dispute) no expert evidence is required in respect of breach of duty or causation.
Streamlined Processes for Standard Track and Light Track Claims (Chapter 8)
The Proposed Standard Track Streamlined Process
Essentially, the proposed streamlined process sets out a timetable of steps which must be taken / ‘deadlines’ which must be adhered to under threat of sanction, as follows:
- ST(A): FRC letter of claim sent by the claimant, which should include:
- medical records;
- experts’ reports on breach and causation (limited to two such experts in different medical disciplines);
- witness statements (limited to two witness statements in template form, including a statement of truth);
- where applicable, a condition and prognosis report;
- details of losses with supporting documents and schedule if required; and
- an offer to settle;
- ST(B): Defendant response (within six months of the letter of claim being served):
- the defendant must acknowledge the FRC letter of claim within 21 days then, within a maximum of six months from service of the letter, choose one of the following options:
- (1) admit breach of duty/causation/liability;
- (2) accept the claimant’s settlement offer;
- (3) reject the claimant’s offer but make a counter-offer; or
- (4) send a response letter denying breach and/or causation, disclosing the defendant’s case and responding to the offer;
- if the defendant takes option (4) above, the response letter must include:
- a reasoned denial;
- experts’ reports on breach and/or causation;
- witness statements; and
- a counter-schedule;
- ST(C): Claimant reply (within six weeks of the defendant response) – optional:
- within 14 days of receipt, the claimant should acknowledge the response and indicate whether they wish to reply;
- ST(D): Mandatory stocktake (within four weeks of the defendant response if there is no reply or within 10 weeks of the defendant response if there is a reply):
- the parties should work towards settlement of liability and/or quantum or, at least, to narrowing issues, where possible, at or shortly after this meeting;
- ST(E): Mandatory neutral evaluation (within four weeks of mandatory stocktake):
- if the claim is not settled at the mandatory stocktake a mandatory neutral – but not binding – evaluation would be held; this evaluation would be by a specialist barrister selected from an agreed panel and would be a paper-only exercise by default; and
- ST(F): Outcome of mandatory neutral evaluation phase (within four weeks of the commencement of evaluation):
- the evaluator must forward the outcome of the evaluation to all parties simultaneously; the outcome is non-binding but the parties should make every effort to settle at this stage.
Applying the above timetable the maximum length of the standard track process would be 44 weeks (or 308 days). The DHSC anticipates that in many cases the whole process would be much shorter. It claims this would be a significant improvement on the current average of time taken to resolve lower value clinical negligence claims of 475 days.
The Proposed Light Track Streamlined Process
The proposed light track process is similar to the proposed standard track process with many of the same steps such as a FRC letter of claim (“LT(A)”), a mandatory stocktake (“LT(C)”), a mandatory neutral evaluation (“LT(D)”) and the outcome of the same (“LT(E)”). There are two main differences with the standard track. The first is that the light track process anticipates that the defendant will admit liability (“LT(B)”) within eight weeks of receipt of the FRC letter of claim or agree to pay reasonable compensation, together with a statement that this represents compensation on a full liability basis, in order to keep the claim on the light track. Otherwise the claim will transfer to the standard track. The second is the possibility of obtaining further evidence (“FE”) after the mandatory stocktake phase or proceeding with no further evidence (“NFE”).
The maximum length of the proposed light track process should be 20 weeks where NFE is required and 34 weeks where it is.
Fixed Costs (Chapter 9)
The DHSC proposes the following grid of FRC:
Table 1: Grid of Costs – Standard Track
Table 2: Grid of Costs – Light Track
Table 3: Protected Party Claims in Standard or Light Tracks
Mandatory Neutral Evaluation (Chapter 10)
The stage at which mandatory neutral evaluation will take place and the role of the evaluator are set out above. The evaluator is required to give reasons for their conclusions. In some cases it may be necessary for the evaluator to move beyond the paper-only process and seek clarification from the experts. The DHSC states that it intends to set out (limited) criteria governing when this is permitted “prior to implementation” of the proposals contained in the consultation document.
Excluded Claims (Chapter 11)
The DHSC’s proposals are that claims which are below the small claims track limit but which would not be expected to be allocated to it due to their complexity “may” be included within the scheme. Further, claims the damages for which are expected to marginally exceed £25,000 “should be managed prudently from the outset as if they will be subject to FRC“.
Thereafter, Chapter 11 sets out a list of clinical negligence claims which, whilst their likely value would not exceed £25,000, would, nevertheless, be excluded from the proposed FRC scheme, as follows:
- claims requiring more than two liability experts on breach of duty and causation;
- claims with “genuine” multiple defendants, where allegations against each defendant are different;
- claims involving stillbirths or neonatal deaths; and
- claims where limitation is raised by the defendant as an issue.
However, claims by protected parties will remain in the scheme but with the “bolt on” to legal fees set out in Table 3 above.
Sanctions to Encourage Adherence to the Scheme (Chapter 12)
The proposed sanctions set out in Chapter 12 are:
- if the defendant does not respond in full to the claimant’s FRC letter of claim within the deadline of six months on the standard track (as set out in Chapter 8), the claim would fall out of the scheme and be dealt with according to the same arrangements as for clinical negligence claims valued in excess of £25,000;
- if the defendant does not respond to the claimant’s FRC letter of claim within the deadline of eight weeks (with an admission of liability or agree to pay reasonable compensation, together with a statement that this represents compensation on a full liability basis, in order to keep the claim on the light track) the claim would fall out of the light track and enter the standard track;
- non-adherence to other deadlines in the streamlined process, or the evidence which must be supplied by those deadlines, would not result in the claim dropping out of the scheme but could be raised in respect of costs should the matter proceed to court; and
- costs sanctions against the claimant where they do not accept the recommendation of the evaluator on liability or quantum, proceed to court, then fail to beat the evaluation recommendation on liability or fail to beat the recommendation on quantum by 20%.
Implementing the FRC Scheme (Chapter 13)
The DHSC’s proposal is that the FRC scheme will apply to claims where the FRC letter of claim is submitted on or after the date of implementation of the scheme.
Reviewing the Upper Limit for Claims (Chapter 14)
Whilst the upper limit of the scheme will be £25,000, the DHSC proposes to review the same post-implementation to take account of the effect of inflation and ensure that a significant proportion of overall clinical negligence claims are dealt with under the scheme.
It is clear that the above proposals, if implemented, would significantly change the procedure and costs allowed for bringing clinical negligence claims where the value of damages is between £1,000 (rising to £1,500 in April 2022) and £25,000.
The full text of the consultation document can be found here.
Those wishing to respond to the proposals contained within it can do so in one of the three ways set out in Chapter 18 of the document. The consultation closes at 11:45 pm on 24 April 2022.
1 See chapter 4 of the consultation document.
2 See the foreword and chapter 1 of the consultation document.
3 See chapter 2 of the consultation document.
4 NHS Resolution (2021), Annual Statistics (Supplementary Annual Statistics), Table 17A.
5 Ibid., Tables 1A & 5A.
6 Ibid., Table 11A.1.
8 P. Fenn and N. Rickman (2019), The Impact of Legislation on the Outcomes of Civil Litigation: An Empirical Analysis of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
9 Currently £1,000 but set to rise to £1,500 in April 2022.