Clinical Negligence Fixed Fees + Other PI Updates01-Feb-2017
Clinical Negligence Fixed Fee Consultation
On 30th January 2017, the government announced details of its consultation into the fixed costs regime in clinical negligence claims.
Health secretary Jeremy Hunt announced that the consultation will run until 1st May 2017 and is aimed at addressing the issues the government believes are affecting the clinical negligence litigation process.
The reforms are intended to drive down the cost of legal fees in lower value cases, up to £25,000, which the government argues are disproportionate to the level of damages awarded to Claimants.
The consultation proposes a fee scale for clinical negligence claims valued between £1,000 and £25,000. Also proposed as a potential option is adding a percentage of damages to fees.
The proposed threshold was originally reduced from £250,000 to £25,000, and brought in line with the upper limits set in other areas of personal injury reforms.
There will be greater clarity as the findings are announced in May, although in the meantime, the NHSLA is facing an investigation by the National Audit Office (NAO) into its processes for defending claims.
Personal Injury Discount Rate
The Lord Chancellor was this week expected to make an announcement in relation to her review of the Personal Injury Discount Rate following a consultation that began in December 2016.
However, it was confirmed on the London Stock Exchange that the announcement was not to take place as expected, but that there is a commitment to making an announcement in February.
The Discount Rate for PI compensation has been set at 2.5% since 2001, and Claimant groups have argued that this is too high given how interest rates have fallen since then. The knock on effect is that many Claimants are not receiving adequate compensation.
While there has been support for the consultation from the MoJ and from the Association of Personal Injury Lawyers (APIL), there had been an unsuccessful legal challenge from the Association of British Insurers which argued that the government consultation had not been properly completed.
The review was implemented again recently as the government ran consultations into the PI Discount Rate in both 2012 and 2013 but never published the results.
Insurance companies have expressed their concern against the review on the basis that compensation payout levels will have to increase and that insurers may have to pass the additional costs on in the shape of higher premiums, something the sector has been claiming to avoid through the whiplash reforms.
Whiplash Compensation Reforms
Meanwhile, research into the whiplash reforms commissioned by Claimant lawyers has revealed the potential impact it could have on the sector.
The research was commissioned by Access 2 Justice, and confirms that up to 35,000 jobs in the sector would be at risk if the proposed whiplash and small claims limit reforms go ahead.
Claimant law firms would lose out in approximately £20m in revenues with the research also highlighting that more than one in four firms could lose virtually all revenues from personal injury work.