Plans to boost compensation for negligence claims ‘calamitous’

Credit: This story was first seen on On Medica

The government’s intention to adjust the awards made for medical negligence claims to take account of future investment returns will prompt a dramatic rise in the amounts paid out and in indemnity costs for doctors, medical defence bodies have warned.

Liz Truss, the Lord Chancellor, has announced that she intends to lower the discount rate from 2.5% to -0.75% in light of continuing low interest rates, On Medica reports.

The discount rate is a mechanism used by the courts to adjust large compensation payments to take account of future investment returns.

But the decision to lower it will increase the cost of compensation awards immediately for known claims. And it will also boost the cost of claims arising from incidents in the future, says the MDU.

It will also apply retrospectively to claims for negligent incidents that have already happened but where no claim has yet been made.

MDU chief executive Dr Christine Tomkins said the body was “very disappointed” by the move.

“We are considering the impact of this decision on our subscriptions and working with the Department of Health and NHS England to find a solution to protect our GP members from the otherwise catastrophic impact this will have on them, the sustainability of general practice, and on the public,” she said.

“Whatever measures are put in place, the fundamental problem of spiralling claims costs remains for the NHS with all the adverse effects this has on the delivery of healthcare. We need a long-term solution to the inflation-busting rises we are seeing in clinical negligence compensation payments. Personal injury law needs root and branch reform,” she insisted.

She said that the impact not only for members, but also for healthcare, would be “calamitous,” adding that she hoped this change in the discount rate would act as a much-needed catalyst to kick start the reform process, which would be “in everyone’s interest.”

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The MDDUS said the decision would undermine its work with the Department of Health, NHS England and others to rein in the cost pressures already in the pipeline because of the higher number of claims and the higher costs already associated with them.

MDDUS chief executive Chris Kenny said: “Everybody agrees that those who suffer medical accidents should be properly and promptly compensated. The increase in claims awarded show that this is already happening.”

But he added “[The] decision, based on a consultation undertaken in 2013, does not reflect that fact, nor anything which has happened in the economy and healthcare in the intervening period – nor what is likely to occur in the coming years as a result of Brexit and other pressures.

“It takes no account of the interests of the NHS, facing acute financial challenges. It ignores the impact of unavoidably high indemnity fees on morale and recruitment in primary care. Future decisions simply must be more joined up.”

Doctors and dentists must be fully protected from the cost of this decision, he said, and proposals for a new way of setting the rate had to be produced as a matter of urgency. The government also needed to produce timetabled proposals to address the wider issue of tort reform in parallel with changing the basis for setting the discount rate.