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Soaring legal costs draining the NHS

The cost of claims in the UK is also likely to increase substantially following the drop in the discount rate from 2.5 percent to -0.75 percent, announced in February of this year. Many in the insurance industry believe that the reduction in the discount rate will result in over-compensation.
nhs

The NHS’ liabilities for medico-legal claims now total £65bn, draining the NHS of much-needed funds and putting patients at risk by driving GPs out of practice concludes Dr Paul Goldsmith, Consultant Neurologist and policy strategist, in his report “The Medico-Legal Crisis and How to Solve It” published Friday 6 October by the Centre for Policy Studies.

The UK’s medico-legal bill is £24 per person, more than twice the US’ £9 per person despite the US’s reputation as a more litigious culture. The cost of claims in the UK is also likely to increase substantially following the drop in the discount rate from 2.5 percent to -0.75 percent, announced in February of this year. Many in the insurance industry believe that the reduction in the discount rate will result in over-compensation.

Causes for the soaring costs in the UK include: The Law Reform (Personal Injuries) Act 1948 – The law covering this area is now 70 years old and does not reflect current realities.  Section 2(4) requires the body or individual paying compensation to disregard the availability of NHS care. This means the financial award reflects the assumption it will only be used for private health care. If the claimant uses NHS care – at no cost to them – they still retain the financial award.

Future salaries – Financial awards take into account lost future salaries, meaning two individuals with identical deficits could receive dramatically different pay-outs.

No reappraisal – If a patient improves, or dies, future costs are not incurred but the pay-out stays with the patient or their family.

Dr Goldsmith puts forward 9 recommendations to bring down costs for the NHS and provide better outcomes for patients: Section 2(4) of the 1948 Act should be repealed. If a patient accepts treatment on the NHS, they should also accept they will be put right in the same way as someone else with an identical injury sustained from sheer bad luck, not negligence.

The system should work on a No Fault compensation basis. NICE should define the appropriate, evidence-based level of care required and apply this to everyone. If an individual believes NHS provision to be insufficient, they have the right to take out insurance for example, to cover loss of earnings.

The financial award should be paid directly from the negligent party to the responsible body purchasing future care. Loss of earnings should be fixed at the National Living Wage or a multiple of salary (e.g. Australia cap at 3x). It should be made easier for patients and families to complain and make “non-complaint” observations which might contribute to improvements without triggering a bureaucratic process. Savings from reform should be used to fund patient safety systems and the learning element of investigations should be improved
Finally, the situation for criminal clinical and personal injuries should remain the same.

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