Press release

Immediate release: 27th June 2011


A new analysis based on recently published Parliamentary Answers has revealed that far from saving the NHS £50m, in fact the impact will be to cost the NHS an extra £105.55million, comprising legal fees, additional compensation and loss of income from recovered treatment charges from insurers.

Access to Justice Action Group (AJAG) co-ordinator Andrew Dismore, who undertook the research and analysis, said:

“It is appalling that the Government is going to cost the NHS over £105 million, in pushing through their civil justice “reforms”.

Even if we are only half right, the cost to the NHS of these ill thought out and hasty measures is truly shocking. The Government is determined to press ahead, despite all the evidence pointing to them heading for a legal services train wreck. The criticisms of their proposals in their denial of access to justice to hundreds of thousands of ordinary people are now becoming known, but this is the first detailed breakdown of how the changes will also affect NHS finances.

The Government should think again about their Bill and its impact not just on accident victims, but on their own finances too. Far from savings for the taxpayer, there will be huge losses. And our figures do not even take into account the long term cost of caring for injured accident victims who will now no longer claim, so the cost of their care falls on hard pressed local councils and the NHS, rather than the insurance companies.”

For further information call Andrew Dismore 07957 625 813

Notes to editors:

1. Impact of increase in claims due to removal of ATE screening comprising:
a) Differential success rate,
b) 10%General damages increase,
c) Costs of defending successful cases
d) And allowing for impact assessment predicted savings: £37m
2. Impact of QOCS in ending costs recovery
In successfully defended cases: £26.35m
3. Loss to NHS of recoupment of treatment costs due
To overall fall of numbers in all PI claims: £42.2m
Total £105.55m

In the year 2010/11, the NHS recovered £169,050,152 in repaid treatment costs. On the Government’s own figures for fewer claims overall, a fall of 8.33% would amount to a loss of £14m and on our more robust estimate of a 25% fall in cases, a loss of £42.2m.
Parliamentary answers have demonstrated that  in round terms, 1/5th of cases are presently funded by legal aid; 2/3rds with the benefit of CFA/ATE support; and the remainder through other systems.
The role of CFA funding (including success fees and ATE) in weeding out unmeritorious claims is well illustrated from the statistics for clinical negligence (HC Deb 8/12/10 c342W).For the last year (2009/10) self funding/BTE cases that were concluded totalled 1,509; legal aid, 1,822; and CFA, 5,842. The success rates with damages were, respectively, 61%, 69% and 73%. This demonstrates that the checks in CFA cases weed out a higher proportion of unmeritorious cases than other forms of funding. QOCS will not deliver that review, so even on these figures there could be at least 12% more unsuccessful cases under QOCS which the NHSLA would have to deal with at a cost to them, even if those cases fail to secure damages.
Moreover legal aid “stats” also suggest that NHSLA will face an increased unsuccessful claims level in the absence of legal aid and CFAs. In 2009/10, 7,470 clinical negligence cases benefitted from legal aid. Of those, 3,446 required representation, and 4,024 received advice help only. (HC Deb 7/12/10 c198W). Based on the differential success rate between legal aid cases and self-funders, there would be an extra 8% failure rate (69% less 61% damages awards). However, if the CFA regime was maintained, there would be 4% fewer.
The impact assessment makes clear that its assumptions do not take account of the incentivisation of more cases being pursued under the Government plans for QOCS; or the proportion of cases funded by CFA, which has now been established at 2/3rds.
If on a conservative estimate only half of those claims presently weeded out by ATE proceed, the potential increase in claims will be up to 1/3rd more, as 2/3rds of cases are presently funded that way.  And even if only half of these succeed (and the success rate can be expected to be higher than that), then that will be an increase of just over 15% in costs on successful cases (4% more than predicted savings); to which can be added the additional 10% in general damages (c 1% of the overall total litigation bill). Defence legal costs under the present system are estimated in the impact assessment of the overall total at 9%. If there is an increase of 1/3rd in cases, that would represent an increase equivalent to 3% of current costs.
The costs of successfully defended claims will no longer be recoverable under QOCS. The impact assessment has “not accounted for the potential loss associated with QOCS”, which should also be added. Parliamentary answers have shown that defence costs over the last 3 years to 2010/11 totalled £134,073,184m for ordinary claims, plus £43,751,490 for periodic payment cases, an average of £59,275m for the 3 years. (HC Deb 8/6/11 c359 and 360W).  This includes all costs. The defence success rate was 34% over the last 3 years, so under the non-recoverability rules of QOCS, the NHS would not recover 34% of that total, which it presently receives from the ATE insurers of unsuccessful claimants, a further average  loss of £19.76m on current case numbers. Of course, if there is an increase in the number of cases of 1/3rd as we predict, this figure would also increase pro rata to £26.35m.
Overall, the additional net costs of the Government’s plan on these conservative predictions will be 4% + 1% + 3% = 8%, or £37m, after predicted savings, plus the loss of income from recovered costs in successfully defended cases of £26.35m and the lost treatment recoupment of £42.2m, an overall total of £105.55m, not the saving predicted by the impact assessment.

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