Following on from our 2022 Forward View published in January, we can now share some key developments over the first half of this year in the field of medical malpractice and personal injury litigation that will impact insurers. From the changing landscape of vicarious liability through to proposals to reform clinical negligence in the NHS and a consultation on fixed recoverable costs amongst other topics, we analyse what these developments will mean for you.

Spotlight on three liability decisions

Vicarious liability

The Court of Appeal decision in Hughes (Respondent) v Rattan (Appellant) [2022] EWCA Civ 107 is of particular significance for private sector healthcare organisations providing services under a contract with the NHS. In Hughes, the Court of Appeal was asked to determine whether the Appellant (the former owner of a dental practice and GDS contact holder) was liable for the treatment provided to the Respondent (a patient) by three self-employed dental associates. The practice owner held a GDS contract, but the dental associates who treated the Respondent had control over how treatment was provided. The court held that the Appellant retained sufficient control to justify imposing vicarious liability.

What this means for you: We could see more of these cases as the private sector plays an ever greater role in ‘Covid recovery’, but the outcome is likely to depend on the precise structure of the relationship. Private sector providers engaged in this work will need to consider contract and indemnity provision closely. Read our insight on the Court of Appeal decision and our insight on legal and practical considerations for vicarious liability and indemnity arrangements, including our top tips.

On 13 and 14 July 2022, the Privy Council will consider the issue of vicarious liability in the case of Gulf View Medical Centre v Tesheira (087 & 093/2015). The Medical Centre is appealing the Court of Appeal of Trinidad and Tobago’s decision that it was vicariously liable for the negligence of a surgeon who had been selected and employed by the Respondent’s late husband who died shortly after surgery.

Psychiatric damage/ secondary victims

In Paul & Paul v Royal Wolverhampton NHS Trust (2022), the Court of Appeal had to determine whether the gap in time between the negligent treatment (for Mr Paul’s cardiac problems) and the horrifying event (his death from a heart attack witnessed by his daughters, 14 months later) meant that ‘proximity’ between the two was not established in law. The appeals (which included two conjoined cases of Polmear and Purchase) were dismissed, since the Court was bound by its earlier decision in Taylor v A Novo Ltd (2013). Read NHS Resolution’scase note on the Court of Appeal decision.

What this means for you: The decisions were welcome news for Defendants but Underhill LJ’s obiter comment that  “if the point were free from authority, I would be minded to hold that on the pleaded facts the Claimants in all three cases should be entitled to recover” suggests the law on secondary victims may be starting to shift again. The Claimants have appealed to the Supreme Court but no date has been fixed for the hearing.

The latest on the Covid-19 public inquiry

Draft Terms of Reference (ToRs) for the inquiry were published in March 2022 and set out the following key aims:

1) Examine the Covid-19 response and the impact of the pandemic in England, Wales, Scotland and Northern Ireland and produce a factual narrative account, including:

• Analysing the central, devolved and local public health decision-making and its consequences.
• The response of the health and care sector across the UK spanning:
  • Preparedness, capacity and resilience;
  • Management of the pandemic in hospitals and care homes (for example, infection control, triage, end of life decisions, transfer of residents to or from care homes);
  • Procurement and distribution of PPE and ventilators;
  • Development and delivery of vaccines;
  • Consequences of the pandemic for non-Covid related conditions; and
  • Provision for those experiencing long Covid.
• The economic response to the pandemic and its impact.

2) Identify the lessons to be learned from the above to inform the UK’s preparations for future pandemics. Examples are given as to how these aims will be met and include consideration of the experiences of and impact on health and care sector workers and listening to the experiences of bereaved families.

Following a consultation on the ToRs, the Inquiry published a summary report, suggesting that the ToRs should be amended to make express reference to a number of matters including initial contact with official healthcare advice services such as 111 and 999, the role of primary care and the development, delivery and impact of therapeutics and vaccines. In addition, the report recommends further ToRs which include the impact on children and young people and on mental health. The Inquiry is unlikely to start hearing evidence before 2023.

What this means for you: The Covid-19 public inquiry spans the entire health sector.In a public inquiry process, individuals and organisations can be compelled to provide documentation, a witness statement and oral evidence under oath. In our experience, early preparation is crucial. If you are going to be involved in the public inquiry, you need to collate contractual information and, where applicable, construct an accurate timeline of events to prove which information was available at the time decisions were made. Read our insight to find out more on how to prepare for the inquiry. Once the government’s response to the summary report is in, a decision will be made on the order in which the inquiry will consider relevant issues. Read our insight on the summary report and what’s next.

Private sector to help drive virtual wards expansion

Aiming for 400 virtual beds per 100,000 population by December 2023, NHS England will use £450 million to fund the development of virtual wards operating to standardised clinical models across every area of England.

All Integrated Care Systems (ICSs) are being asked to extend or introduce the virtual ward model. NHS England’s guidance for ICS leadership teams to support strategy and financial planning, contains helpful information for provider organisations who are considering whether to partner with the NHS. The guidance highlights the private sector’s IT expertise, which will be an integral part of a successful roll-out.

What this means for you: Independent providers in both the healthcare and the technology sectors will need to review contracts for the supply of their services, software and equipment to ensure that appropriate indemnities are in place and that they have adequate liability insurance cover.

Court of Appeal reviews aggregation clauses in insurance contracts

The application of aggregation clauses in insurance contracts was considered by the Court of Appeal in the case of Spire Healthcare Ltd v Royal Sun Alliance Insurance Ltd [2022] EWCA Civ 17. The case arose out of the claims against Spire in respect of the actions of Ian Paterson. The claims against Spire were divided into two groups.

The Court of Appeal allowed the appeal, finding that claims from both groups should be aggregated; as a result, the limit of indemnity in the policy stood as a single limit. This is a useful judgment for insurers when considering multiple claims which follow the actions of a single individual.

What this means for you: While the reasoning in the judgment doesn’t apply to all cases, it is helpful to an insurer looking to aggregate a number of claims on the basis of the behaviour/actions of one individual (consultant or otherwise). For example, it may assist insurers in limiting their exposure in group litigation claims. Read our insight on the judgment.

Exceptional case funding for inquests no longer means-tested

Bereaved families facing an inquest into a death under article 2 of the European Convention on Human Rights are no longer required to pass a means test to secure public funding for legal representation. An ‘article 2’ inquest will be triggered if the death took place in police custody or while the deceased was detained in a mental health facility.

Comment: Although ‘article 2’ inquests represent a small proportion of inquests, we are likely to see more families being represented and possibly an increase in the overall number of such inquests.

Proposals for reform of clinical negligence litigation

The Health & Social Care Committee (HSCC) has called for radical reform of NHS clinical negligence litigation in an attempt to try and curb the huge future legal liabilities for the NHS. Key proposals from the committee’s report include:

• An independent administrative body to investigate cases and determine compensation.
• Access to compensation is to be based on agreement that correct procedures were not being followed/ system failure, rather than the current Bolam test.
• All compensation is to be based on the costs necessary to top up NHS care.
• Future earnings link to parental earnings for under 18s is to be replaced with the national average wage.
• Patients will not be prevented from litigating, but they would have to go through the new administrative body as a mandatory first step.
• Prevention of future harm will be at the core of the new system.

Comment: Much has been said in the past about reforming the current system of clinical negligence in the NHS and it remains to be seen to what extent any such reforms are considered by the government. The likely cost of such a system and how to deal with the issue of causation are likely to be significant issues.

Fixed recoverable costs in lower value clinical negligence cases

The government has proposed a scheme of fixed recoverable costs (FRCs) for clinical negligence claims of up to (and including) £25,000. The aim is to achieve faster resolution of these ‘lower value’ claims, at a more proportionate and lower cost than under the current system. If introduced, FRCs will apply to cases covered by insurers as well as NHS cases.  The proposals include a new streamlined process for claims – a ‘light’ track where breach of duty is admitted or there have been other adverse findings (e.g. in a serious incident investigation or an inquest) and a standard track.  

Comment: The FRC proposals have been subject to a consultation. Those regarding serious incident and inquest findings will have caused concern for healthcare organisations as both are factual investigations rather than designed to attribute blame. The government’s response to the consultation is awaited.

Provisional damages awards: claim based on dementia risk resisted

In Mathieu v Hinds and Aviva plc [2022] EWHC 924, the Claimant sought provisional damages for the future risk of deterioration in his condition due to epilepsy and dementia. He suffered a traumatic brain injury (TBI) in a road traffic accident (RTA), but made an exceptional recovery – in the top 1% for this type of injury. The High Court allowed the provisional damages claim for epilepsy (lifetime risk ranged from 5 to 8%), but the claim for the dementia risk was rejected as the judge considered the evidence base to be insufficient.

Comment: The need to ‘buy off’ the risk of a provisional damages award for epilepsy risk is fairly common in brain injury cases. Claims for dementia risk are a newer phenomenon, but are on the rise. We understand that Mathieu is the first case where the issue was litigated, and the decision is important for Defendants and their insurers. Had a provisional award been made, wholesale review of brain injury claims reserves would have been necessary and claims values would have been likely to increase.

Courts continue to take a robust approach to fundamental dishonesty

In North Bristol NHS Trust v White [2022] EWHC 1313, the Respondent received a six-month immediate custodial sentence for attempting to defraud the NHS of over £4 million.  The claim, which arose from a delay in diagnosing cauda equina syndrome, was found to be fundamentally dishonest. It had been struck out after surveillance evidence showed the Respondent walking normally despite claiming to have mobility issues which required her to use a crutch.

In Hull University Teaching Hospitals NHS Trust v Colley [2022] EWHC 854, the Respondent’s litigation friend was given a six-month prison sentence, suspended for two years, for giving false evidence to support her daughter’s £5.4 million claim based on negligent treatment of hip dysplasia.

Comment: The White case sends a clear message to potential Claimants that fraudulent claims will not be tolerated. The judge described Ms White as presenting a ”risk to the public purse and public institutions”. Colley demonstrates that lack of a finding of fundamental dishonesty under s.57 Courts and Criminal Justice Act 2015 is no bar to successful contempt proceedings. The claim was discontinued before the issue of fundamental dishonesty could be considered by the court. Proceedings for contempt of court were brought based on falsehoods in the mother’s witness statement.

Variable Periodical Payments Order (PPO) made, Personal Injury Trust (PIT) refused

Martin v Salford Royal NHS Foundation Trust (payment of damages) [2022] EWHC 532 involved a Claimant who suffered significant orthopaedic injuries and a brain injury causing cognitive impairment, as a result of the Defendant’s negligence. She also had long-standing mental health problems. It is an unusual case as it involves a variable PPO, requested by the Defendant. The application was made since a serious deterioration in the Claimant’s condition would lead to a decrease in her care costs as she would need to move from domiciliary into institutional care. The judge accepted that the court’s discretionary power to make such an order had arisen as there was more than a fanciful chance of future deterioration. A variable PPO was made.

The judge refused the Claimant’s application for a PIT as it would fail to address the risk arising from her vulnerability to financial exploitation due to her mental health problems.

What this means for you: Circumstances where a future head of loss could reduce in value are likely to be rare, but a variable PPO may provide a better solution for both parties than a lump sum order. Defendants will avoid having to try and recoup money that may already have been spent and Claimants will avoid uncertainty. As orders under the Damages (Variation of Periodical Payments) Order 2005 permit only one application to vary to be made, Defendants should consider the best time to make their application and ensure that it is fully supported by expert evidence. It will help if the parties’ experts are in agreement or that the expert is jointly instructed (like the neuro-rehabilitation expert in this case). Applications for the cost of funding PITs for adults with capacity should be resisted. In contrast, the cost of managing a damages award is likely to be allowed (subject to proof) in the case of incapacitated adults and children.

How Capsticks can help

Aiming to be the firm of choice for medical malpractice insurers and healthcare providers, we advise and support on all aspect of medical law including claims, inquests and regulatory proceedings. This insight was co-authored by partner Majid Hassan and consultant Cheryl Blundell.

To discuss how any of these issues may affect your organisation, please get in touch with Majid Hassan, Sarah Bryant or Ed Mellor.