High-Severity Claims: Is the Sky Really the Limit? David Pranklin 9 October 2014 Basic Principles - UK The general aim of an award of damages in tort is to put the injured party in the same position as he would have been in if the tort had not occurred Cost to defendants irrelevant Claimant can spend or invest damages in any way he or she sees fit Compensatory awards Aggravated damages rarely awarded Exemplary or punitive awards not available in clinical negligence © MDU Services Limited 2014 Recent History Discount rate Damages Act 1996 Periodical Payment Orders (PPOs) Thompstone v Tameside 2008 Peters v East Midlands 2009 Helmot v Simon 2012 © MDU Services Limited 2014 Damages Law Reform (Personal Injuries) Act 1948 Future care Accommodation Loss of earnings Lump sum settlement Periodical Payment Orders © MDU Services Limited 2014 Reserves NHS Litigation Authority (NHSLA) Financial year 2012/13 - £23.6bn ($38bn/€29.4bn) Financial year 2013/14 - £26.1bn ($42bn/€32.5bn) New obstetric claims 2013/14 11% in number of new claims notified 35% of reserves in respect of new claims © MDU Services Limited 2014 Examples 10 year old girl arterio-venous malformation Polymerised glue injected instead of contrast medium Lump sum payment of £2.8m ($4.5m/€3.5m) PPO - £383,000 per annum to age 19 PPO - £423,000 per annum thereafter Claimant alleged life expectancy to age 64 Defendant contended life expectancy 23 Total cost to 23 - £6.025m ($9.7m/€7.5m) Total cost to 64 - £14.8m ($23.8m/€18.5m) © MDU Services Limited 2014 Examples Brain injury Age ten at settlement, life expectancy to 50 Lump sum £3m ($4.8m/€3.7m) PPO - £130,000 to 19, £200,000 thereafter 2.5% discount rate - £7.5m ($12.1m/€9.3m) 1% discount rate - £9m ($14.5m/€11.2m) -1.5% discount rate - £13m ($20.1m/€16.2m) © MDU Services Limited 2014 Who’s at risk? NHS – Obstetrics MDU – General Practitioners MDU record – neurosurgeon Plastic surgery case © MDU Services Limited 2014 The way forward? Discount rate review Fair compensation campaign Reform how awards are calculated Caps on awards for future care Caps on awards for loss of earnings Who looks after the uncompensated? Is the cost to society really irrelevant? © MDU Services Limited 2014 Membership t 0800 716 376 e [email protected] Advisory t 0800 716 646 e [email protected] Website themdu.com @the_mdu MDU Services Limited (MDUSL) is authorised and regulated by the Financial Conduct Authority for insurance mediation and consumer credit activities only. MDUSL is an agent for The Medical Defence Union Limited (MDU). MDU is not an insurance company. The benefits of MDU membership are all discretionary and are subject to the Memorandum and Articles of Association. MDU Services Limited, registered in England 3957086. Registered Office: 230 Blackfriars Road, London SE1 8PJ.
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