This article is published as part of Capsticks’ Medical malpractice insurance: mid-year review 2025.

Increased use of Artificial Intelligence (AI) in healthcare will warrant greater legal governance 

In his recent speech launching the government’s AI Opportunities Action Plan, the Prime Minister signalled his intention that the UK becomes an ‘AI superpower’ “the best place to start and scale an AI business.” The Action Plan included AI growth zones, development of a National Data Library and “jobs and investment in every part of the country.” With the continued development of AI, opportunities will exist for the NHS and the independent sector to provide more targeted healthcare, more quickly and efficiently and at a potentially cheaper cost base. In addition, commercial opportunities abound for developers, manufacturers and suppliers. However, with opportunity comes risk, which anyone operating in this sector will need to manage in order to avoid the pitfalls. This balancing act is a significant challenge given that we have no specific AI law (yet). Legal issues range from data protection/ confidentiality, equalities, medical device regulation, intellectual property and procurement to liability (clinical, product and contractual) and indemnity. 

Comment: Giving thought to liability and indemnity issues at an early stage of an organisation’s AI journey – and in particular, ensuring contractual indemnities are in place where needed- will go a long way to protecting it from unexpected problems. Considerations include: 

• Where does liability lie if a patient has suffered harm from a clinician using an AI-enabled application? 
• Who is liable if the product behaves in a way that wasn’t anticipated? 
• Are you exposed to liability if you fail to use AI (or use it improperly) or ignore the results? 
• How would you deal with a non-delegable duty of care argument? What is the contractual liability and indemnity position? 

Majid Hassan and Dr Annabelle Painter recently considered these and other issues in a RSM podcast.

The new personal injury discount rate could lead to novel arguments on quantum and more requests for periodical payment orders

The Lord Chancellor’s review of the personal injury siscount rate (in England and Wales) has been completed, and a new rate of 0.5% came into effect on 11 January 2025. The rate represents an increase on the previous rate of minus 0.25% which was in force from July 2019. The Lord Chancellor’s statement of reasons revealed that the expert panel’s recommendation was a range from 0.5% to 1%, but that she considered the “likelihood of under-compensation with all rates above 0.5% to be too high…” The consultation documents which informed the review suggested that multiple or dual rates were under consideration, but the Lord Chancellor has opted for a single rate. 

Comment: The impact assessment for the rate change estimated savings of around £200 million per annum for the NHS and £150 million per annum for insurers, based on assumptions that there will be no change in the volume of personal injury cases or periodical payments orders (PPOs) made and no change in the costs of reaching settlement. 

Insurers will have reviewed reserves in the lead-up to the rate change. Under Part 2 Civil Liability Act 2018, the next PIDR review must be concluded by 11 January 2030. We suggest a particularly close eye is kept on reserves going forward as claimants’ representatives may seek to offset the reduction in claims values with novel arguments on quantum. An ongoing shortage of skilled carers, coupled with increasing accommodation conversion and equipment costs, mean that savings on the multiplier will be under significant pressure from potential increases in the multiplicand. We may also see an increase in the number of PPOs, where the discount rate has no impact on the annual payments. 

There is likely to be closer scrutiny of the actions of managers when patients are harmed

The government has announced that legislation for a ‘Hillsborough Law’ will be introduced in Parliament before the next anniversary of the Hillsborough disaster which falls on 15 April 2025. A draft Bill is awaited, but the King’s Speech revealed that the provisions will apply to all public servants and authorities and will impose a duty of candour, backed up by criminal sanctions. Currently, regulation 20 Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 imposes a statutory duty of candour on healthcare organisations in addition to the general/ professional duty to act in an open and transparent way. The government’s proposals go much further and represent a radical culture shift. If the new Bill mirrors the Public Authority (Accountability) Bill 2017 (halted by the 2017 general election), it will “not only require organisations and public servants to tell the truth, but require them to proactively assist from the outset…” (Parliamentary Joint Committee on Human Rights who endorsed key elements of the Bill in May 2024) 

Comment: The proposed Bill is said to cover (only) public servants and authorities, so will there be any consequences for the independent healthcare sector? If enacted such a law’s sheer existence is likely to have an impact when set against a backdrop of one of the biggest healthcare scandals which spanned the NHS and the independent sectors – the activities of Ian Paterson who in 2017 was jailed for 20 years for wounding with intent/ unlawful wounding. In his Hillsborough Inquiry report Bishop James Jones identified one of the key problems as “an instinctive prioritisation of the reputation of an organisation over the citizen’s right to expect people to be held to account for their actions.” A ‘Hillsborough Law is likely to mean that an independent sector manager’s actions will, at the very least, come under closer scrutiny from the public and the media. 

Will proposals for Lower Damages Fixed Recoverable Costs (LDFRC) ever become law?  

Prior to the July 2024 general election, the Conservative government signalled its intention to implement the LDFRC regime in October 2024. The central plank of the regime was that only fixed costs (plus a limited number of disbursements) would be recoverable in clinical negligence cases (excluding stillbirth and neonatal claims) with a value up to £25,000. The regime contained various phases which triggered a review of the claim and an opportunity for resolution. For detail see Medical malpractice insurance mid-year review 2024. However, the requisite legislation was not drafted prior to the dissolution of Parliament. The Ministry of Justice under Labour has given no firm indication so far that the proposals will go forward, although concern has been expressed regarding the cost of clinical negligence claims, most recently in Lord Darzi’s report on the state of the NHS. 

Comment: LDFRC was designed to achieve better proportionality of legal costs to the value of the damages claimed. Its stated aim was “speedier justice”. If the proposals are resurrected there is likely to be an impact on claims costs overall. There is clearly an appetite to bring down the cost of claims for the benefit of consumers who pay for insurance and for the NHS, where funds for clinical claims are diverted from clinical care. The extent to which the Ministry of Justice has the time and resources to push this forward given competing priorities, may well determine whether the proposals ever reach the statute books. 

The government’s waiting list initiative will bring both opportunity and risk for the private sector 

Waiting lists for NHS elective care stand at 7.54 million (October 2024). To reduce the backlog, the Secretary of State for Health and Social Care has signalled his intention to make greater use of the private sector. This initiative provides a significant opportunity for independent providers whether they are clinicians, hospitals or healthcare organisations. But all opportunities bring risk. Increased patient numbers and the potential pressure to treat patients quickly are fairly obvious risks which are likely to be mitigated by careful planning. At the other end of the spectrum are a multiplicity of contractual risks which are often not fully understood. 

Comment: It is important that all individuals or organisations undertaking any private work for the NHS are fully aware before treatment is undertaken of where liability may lie for any harm to a patient arising from negligence. This will involve consideration of whether treatment is to be undertaken via the NHS Standard Contract and whether the clinician is acting under practising privileges (as an independent contractor) or as an employee of the private provider. Indemnity arrangements should be checked to ensure cover is adequate and valid, as many policies specifically exclude NHS work. Signed contracts should include clear and appropriate indemnities – not only between the private provider and the NHS but also between the private provider and the clinicians involved. Copies of relevant insurance policies and contracts should be retained. 

 Capsticks provide a full service to review contractual arrangements in such situations to provide peace of mind to our clients. 

Good communication and rehabilitation may have greater emphasis at pre-action stage 

The Civil Justice Council has published its Phase 2 final report. Proposals to amend the Pre-Action Protocol for Personal Injury include:  

• Fatal claims – standard lists for disclosure requirements. For example, death certificates, inquest material, and known dependants. 
• Quantum – the section on special damages should require particularisation of past losses as far as possible and identification of heads of future loss, even if details are marked ‘To be confirmed’. 
• The report acknowledges the recent update to the Civil Procedure Rules (CPR), giving courts the power to order mediation in certain circumstances and recommends that the concept is given greater prominence and explained more simply. 
• Rehabilitation - claimants will be encouraged to be more open about what rehabilitation they are seeking and compensators to give reasons for a refusal. 

In clinical negligence, a new section on good communication is proposed covering the duty of candour and apologies.  

Comment: The proposals on fatal claims, quantum, and the recent amendment to the CPR regarding mediation should assist defendants and their insurers to investigate, value and potentially resolve personal injury claims earlier. The rehabilitation proposals could lead to more requests for early rehabilitative treatment in the independent sector, particularly in view of current NHS resource issues. The ‘good communication’ proposal references NHS Resolution’s guidance on 'saying sorry' and stipulates that apologies should be substantive and not merely a ‘token gesture.’  Those indemnifying private doctors and clinics must ensure that there is clarity around notification obligations and apologies that are issued. 

New clinical trials framework should speed up trial approvals and encourage innovation 

The Medicines and Healthcare Products Regulatory Agency (MHRA) describe the new framework as an “important milestone in (their) biggest overhaul of clinical trial regulations in 20 years”. Elimination of unnecessary duplication (e.g. the introduction of a combined review and notification scheme) and acceleration of approvals (by taking a risk-based approach) are central to its structure.  A statutory instrument to amend the Medicines for Human Use (Clinical Trials) Regulations 2004 was laid before parliament on 12 December 2024 and is likely to be debated in the coming months. The new legislation is expected to come into force in early 2026, following a 12-month implementation period. 

Comment: The framework aims to reduce unnecessary bureaucracy for trial sponsors without compromising patient safety. The new regime will complement the government’s wider plan to promote life sciences in the UK, which aims to expand the market, which will bring further opportunities for insurers. Further information on its proposals can be found in our post-election insight. 

How Capsticks can help  

Capsticks aims to be the firm of choice for medical malpractice insurers. We advise and support on all aspect of claims ,inquests and associated proceedings. Our experts are routinely instructed to assist and support insurers and their insured.. 

If you have any queries around what's discussed in the insights, and the impact on your organisation, please contact Majid Hassan, Cheryl Blundell, Ed Mellor or Sarah Bryant. 

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