Tuesday, 18 September 2012

Reponse to Centre for Policy Studies Report on Compensation Culture

It is difficult to know where to begin....

The Centre for Policy Studies report on the Social Costs of Litigation has received a great deal of media attention. It was reported in all the national newspapers and its principal author, Professor Frank Furedi, was interviewed by a surprisingly unchallenging John Humphreys on Today. The report bemoans the compensation culture and its distorting effect on the provision of public services. It  concludes that "it is important to separate compensation in the public sector from tort law. Policy makers need to consider how a scheme of no-fault liability can be devised to deal with those who have suffered harm."

Those who would oppose such reforms should not be complacent. The CPS is an influential think-tank, and, as the media reaction to the report has shown, there is a willing audience for accusations and recommendations of this kind.

Reading the report I was struck by the heavy reliance on anecdotal evidence and the casual use of pejorative language. Professor Furedi is an academic and I am what he calls a "greedy lawyer" or "ambulance chaser" given that I act for individuals bringing claims against public bodies. So it is with some humility that I question the evidence on which his far-reaching recommendations are based.

In relation to the damaging effects of litigation in the education sector, the report first seeks to set out   the extent of the "problem":

"Accidents and incidents

In September 2010, it was reported that ‘as many as 10 children a week are securing pay-outs after suing schools for injuries picked up in classrooms, sports fields and playgrounds’, citing figures released under the Freedom of Information Act showing that ‘£2.25million in compensation was awarded to pupils last year after councils admitted liability for school accidents.’42

Results from a series of Freedom of Information requests conducted in 2011 similarly reveal that compensation culture’ within schools is very much in evidence, with some bizarre and costly results. In response to these requests, councils revealed they paid out a total of more than £2 million in 2010 as a result of 347 claims that were successfully brought against them by injured children.43 "

Interestingly the footnotes show that the sources of the figures given were respectively The Daily Telegraph and The Daily Mail.  I would not for a moment suggest that the information is therefore unreliable, but it is an odd source of core material for an academic to use when preparing a report which seeks to influence government policy. The report continues,

" Litigation within the education sector is not limited to pupils suing their schools. A further series of Freedom of Information requests found that councils paid out an estimated £6.7 million in 2010, in cases where teaching staff took legal action for injuries they picked up while at work....
In 2010, there were just over 400 successful claims for
compensation [by teachers] with the average cost to councils of £16,600 each"
[Source - Daily Mail].

At least the source for the £6.7 million estimate was a survey of local authorities rather than a newspaper article.

Even assuming the figures used are correct, they surely do not demonstrate a compensation culture. Indeed they show how very rare such compensation claims are!

The Department of Education reported that there were 8.1 m pupils in our schools as at January 2010. Assuming as many as 10% were in the private sector that leaves 7.29 m in the state sector. If 10 claims a week by pupils are successful (the higher of the two figures quoted in the report) then that amounts to one claim per 14,000 pupils. Hardly a litigation epidemic.

And in relation to the 400 successful claims by teachers: the Department of Education's workforce Survey found that there were 438,000 teachers working in the state sector in November 2011. So that makes 1 successful claim per 1000 teachers.

It is perfectly fair to say that the cost to the NHS of compensation claims is very much greater than in the education sector. The report states that costs of litigation against the NHS, including damages equate to about 2.5% of the NHS budget. That is a very high figure. I would entirely endorse any sensible measures to reduce the costs of litigation against the NHS, for example early, independent investigation into potential claims, with open admissions and offers where appropriate. However this Report's conclusions are surely misguided. The authors assert that,

"suing a publicly-funded institution such as the NHS amounts to a spectacular own goal for citizens of Britain. Whatever we ‘make’ from a claim against the NHS, we – or our friends and family – have to pay back to the service somehow to cover the cost of the claim."

 I would make two short points about that statement. First, some of the compensation paid, for example to provide care, equipment and housing for injured patients, is money which the state would have had to pay in any event through benefits, local authority services or otherwise. Second, I do not believe that the citizens of the state do, or ought to, begrudge payments to compensate users of the NHS, state education or other state services for injuries suffered as a result of negligence by the providers of those services. Even those members of the public who question the amount of compensation awarded would surely not object to the principle that when the state makes unacceptable mistakes which injure those in its care, it should pay compensation.

In any event the report does not call for a prohibition on compensation nor even a reduction in levels of compensation. Instead it calls for a no-fault liability scheme to cure the ills of the compensation culture.

The first effect of such a scheme would be to increase the number of claims. Countless non-negligent clinical errors are made within the NHS. Many patients suffer avoidable injuries for which they are not presently able to bring a claim because they cannot prove negligence or causation.

It follows that unless the levels of compensation paid to claimants were signficantly reduced below current levels, then the scheme would cost the state much more than the present litigation system. I assume that it is not suggested that a pupil injured as a result of negligence in a private school should be awarded more compensation that a pupil suffering the same injury in a state school. Surely the CPS does not believe a child suffering cerebral palsy born in an NHS hospital should have less compensation than a child with cerebral palsy born in a private hospital?

Legal costs per claim might be reduced, but would not be wholly avoided. There would still be a need for representation in relation to issues of entitlement and the level of compensation. Justice would demand an appellate structure. Even allowing for some overall saving in legal costs, the total costs to the state would increase.

If the aim is to reduce the cost of claims to the state then the CPS should be honest - the only means by which a no fault liability scheme might save costs would be by substantially reducing levels of compensation. But for every £1 saved in compensation, there would be an increase in the burden on other parts of the welfare state and on the "families and friends" of the injured person.

Clearly litigation can encourage defensive practices by those potentially liable, but largely that is a "good thing". Labelling conduct as "defensive practice" is another way of saying that it is conduct which protects individuals from harm. In some cases, no doubt, the fear of litigation can lead to practices which are excessively defensive. In those circumstances it is incumbent on managers and leaders to take measures to counter such practices. In my experience the courts fully support such measures where they are reasonable. Judges and even "greedy lawyers" are fully aware of the demands on healthcare professionals and on the NHS generally of the resource implications of decisions and of the need to allow for the exercise of professional judgment.

This report proposes an ineffective and costly solution to an  exaggerated problem.

1 comment:

  1. Well this just proves that some claimants are just after for the compensation and not about seeking justice. Medical negligence solicitors should do some thorough research about the event or the accident that happen if there are really clinical errors on the part of the medical professionals.