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Norman Lamb: Is the Minister envisaging that serious misconduct may be something that falls significantly short of contempt?
Mr. Leslie: Not being one to interpret court matters, I am not qualified to answer that question. If inspiration strikes, I will elaborate on the matter. I can answer the hon. Gentleman's point about the European convention on human rights. He asked about the term ''serious misconduct'' in that respect. The concepts of both ''misconduct'' and ''serious misconduct'' are already used in other legislation elsewhere without being defined in any further detail. So far there has not been a problem with that definition, nor do we feel that there are human rights implications. When contempt is relevant—in publicity matters, for example—it may fall short of contempt, but not by very much. The clarification of that expression is flexible.
Amendment No. 97 would add the concept of ''wilful'' misconduct. That would be limiting and undesirable.
An impropriety may be serious but not wilful. For example, publishing a newspaper article reckless of the potential impact on a trial should be capable of being caught by the courts, even though it may not have been done wilfully in the sense that there was no wilful intent to disrupt the administration of justice.
However, it is reasonable to believe that professional journalists or editors would understand the high degree of care that needs to be taken with articles about those involved in or related to current criminal proceedings. The word ''wilful'' could unduly restrict the court in cases of reckless acts or omissions where a third party costs order would be appropriate.
Amendment No. 99 seeks to limit the requirements to be satisfied before a costs order can be considered by the court, by limiting the definition of ''serious misconduct'' to an ''intentional or reckless act'', the act to one that makes ''a material contribution'' to the mischief, and the mischief to ''delaying or causing the abandonment'' of a trial.
As I have said, the Government believe that it should be for the courts, after considering all the facts of each case, to determine which improprieties, including omissions as well as acts, constitute serious misconduct. The provisions in clause 93 allow the courts to do so. Where serious misconduct has been established, the courts can determine whether and to what extent it is appropriate for the third party to pay the relevant cost. That will turn principally on the extent to which the serious misconduct has caused a party or parties to the proceedings either to waste or to incur costs.
Norman Lamb: Is the Minister not at all concerned that by allowing a wide description courts could interpret the provision in different ways and that the amendment, by defining serious misconduct as either intentional or reckless, which materially contributes to delay or abandonment, creates a framework within which courts can properly assess decisions about awarding costs? It seems that it gives direction to courts that will be helpful to them and will prevent a very wide discretion from being exercised.
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Mr. Leslie: I disagree with the hon. Gentleman. I have already explained how adding further terms involving serious misconduct would potentially create adverse consequences and would not give the court the scope to ensure that those cases of serious misconduct were treated exactly as they should be. I believe that there is ample definition for the circumstances that we are talking about, and that it should be for the courts, after considering the facts of each case, to determine which improprieties, including acts not undertaken or omissions, would constitute serious misconduct.
For those reasons I am also wary of amendment No. 99. This is the rationale by which we have proceeded in drawing up the provision, and it is why we do not feel that adding other notions as the amendment suggests would be desirable.
The hon. Member for North Norfolk supported amendment No. 98, which was tabled by the hon. Member for Surrey Heath. It proposes that when the court is considering making a costs order, the third party must be notified and given the opportunity to make representations before any such order is made. We accept that the third party must have the right to a hearing, but we propose that that be provided in the regulations, not in the Bill itself.
In respect of notice of representation for third parties the Government intend to follow provisions already existing in regulations made for related cases under part II of the Prosecution of Offences Act 1985. Regulations 3 and 3B in those circumstances provide that parties to the proceedings who have acted improperly, and legal or other representatives who have acted negligently, may make representations to the court before any costs order is made against them. I hope that is helpful to hon. Members who are concerned about amendment No. 98.
In those cases, it has been sufficient for the issue of representations to be dealt with in regulations, not in a Bill, and we believe that the same applies in these circumstances. I assure the Committee that we will make similar provision in the regulations in respect of third parties.
Amendment No. 101 proposes that any regulations made under the clause that deal with the award of costs against third parties should be made by way of the affirmative resolution procedure. In preparing the provision, we took the view that none of the usual reasons for using the affirmative resolution procedure applied in this case. The Select Committee on Statutory Instruments raised no objections in its report on the Bill, and hon. Members will know that we attach great importance to its judgment on such matters.
Secondly, we see no reason why the regulations made under clause 93 should require the affirmative resolution procedure, when the existing provisions that they are mirroring have been subject to the negative resolution procedure in other Acts such as the Prosecution of Offences Act 1985. For reasons of consistency, we think that the negative resolution procedure is amply sufficient.
I hope that I have addressed all the amendments in the group in sufficient detail, that the Committee
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recognises that the amendments would not be justified, and that they will be withdrawn.
Mr. Hawkins: I am grateful to the Minister for spending a little time going through all the amendments. He will appreciate that both the hon. Member for North Norfolk and I feel quite strongly about the issues. It was particularly helpful to hear the Minister's response to amendment No. 98, in which he made it clear that third parties will have the right to be heard before any third party costs order is made against them. Of course, amendment No. 98 simply says ''Regulations . . . must provide'', so we were still saying—as was the Minister—that the details would be in regulations. However, the Minister says that he does not want the wording that we have put forward to be added to the Bill because he will make the regulations anyway. Now that he has said so on record on behalf of the Government, we have achieved our main object.
I do not entirely agree with all the Minister's responses on the other amendments. I would have preferred to include the definition of ''serious misconduct'' given in amendment No. 99, and I think that it would have been helpful to include ''serious and wilful'', too. However, I shall not detain the Committee by dividing it on the amendments, as we have dealt with what I regard as the most important issue of all—that third parties should be guaranteed a right to be heard before a costs order is made against them. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 93 ordered to stand part of the Bill.
Clauses 94 and 97 ordered to stand part of the Bill.
Schedule 6 agreed to.
Clause 98
Periodical payments
Amendment proposed: No. 155, in
clause 98, page 49, leave out lines 38 to 40 and insert—
'(9) But—
(a) an order linking the periodical payments to the retail prices index shall not be made in respect of damages for the cost of future care or medical expenses; and
(b) in any other case an order for periodical payments may include provision disapplying subsection (8) or modifying the effect of subsection (8).'.—[Norman Lamb.]
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 105, in
clause 98, page 50, leave out from beginning of line 20 to end of line 17 on page 51.
Amendment No. 106, in
Amendment No. 108, in
clause 98, page 50, line 30, at end insert—
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'( ) An order under this section shall apply only to cases in which it is admitted or proved to be a significant prospect of serious deterioration, or development of a serious further medical complication affecting the relevant party involved, which is admitted or proved to be consequent from the act or omission which gives rise to relevant cause of action, as identified by the medical evidence before the court.'.
Amendment No. 107, in
clause 98, page 50, leave out lines 42 and 43.
Mr. Hawkins: I am delighted to have caught out the hon. Member for North Norfolk for once; he did not appear to be ready to speak to his amendment. I am sure that he is regretting the absence of the hon. Member for Somerton and Frome (Mr. Heath), because he had not appreciated that the selection list puts the Liberal Democrat amendment first in this group. If I may, I shall help him out somewhat, because I shall strongly oppose his amendment No. 155, and by the time I have finished opposing it, he will understand the basis of the argument—as, I hope, will the rest of the Committee.
There was a substantial debate on all these matters in another place. We are dealing with an enormously important part of the Bill.
I am indebted to Dr. Gerard Panting and Shelley McNichol from the Medical Protection Society, my noble Friend Lord Hunt of Wirral and others for providing me with briefing on these important issues. I am reasonably familiar with some of the issues because I dealt with a lot of medical negligence cases, not only when I was at the Bar, but in my subsequent career as a lawyer specialising in insurance issues. I continue to keep in touch with the subject, because I am deputy chairman of the all-party group on insurance and financial services. My noble Friend Lord Hunt is also actively involved in that very good all-party group.
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We are always concerned when developments are proposed that could lead to the kind of defensive medicine where highly trained, skilful surgeons and other medical consultants feel unable to use their full skills because they are looking over their shoulder at what the insurance position might be. According to the Medical Protection Society and the National Health Service Litigation Authority, some of the things being proposed, which could be valuable provisions in general terms, would be terribly damaging. In particular, the Liberal Democrat amendment No. 155 could be damaging.
I shall first deal with the concerns of Lord Hunt and the NHS Litigation Authority. Clauses 98 and 99 will enable the courts to order periodical payments for future loss and care costs in appropriate cases. In calculating future loss in damages generally, the discount rate had been set at 2.5 per cent. Since then there have been a number of efforts on the part of solicitors for claimants to find a way around that discount rate.
I am aware that the Liberal Democrats in another place, and again today, were briefed by the knowledgeable and experienced QC Mr. David Kemp—I pay tribute to his knowledge of this field. He approached the Liberal Democrats to table an
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amendment in another place to allow periodical payments for the cost of future care to be uprated according to what is referred to as a ''care index'', rather than the retail prices index, on the basis that far higher damages would be awarded. However, Lord Hunt, who led for the Conservatives in another place, was alerted by the NHS Litigation Authority to the fact that such a provision would substantially escalate the level of damages for future care in structured settlements. It would also read across into lump sum damages, making the figures that are awarded much higher. The assessment of the NHS Litigation Authority is that moving to a care index, or RPI plus an additional percentage, would add literally billions of pounds to the accrued claims reserves.
I refer any interested Committee members to what was said in another place on 19 May this year, which is recorded in columns 536 to 538 of the House of Lords Hansard. I am referring to an exchange between Lord Goodhart for the Liberal Democrats and Baroness Scotland for the Government. No doubt the Minister will repeat some of the issues that were raised by the Baroness. The debate was on a Government amendment, which was introduced following the Committee stage on Third Reading. In response to the clarification by Baroness Scotland of the reference to RPI and the meaning of proposed subsection (9), Lord Hunt was able to withdrawn his amendment, which limited the operation of an opt-out clause to exceptional circumstances, as was clearly intended.
The Government contend that the clauses will deal with the mechanism of payment, and were never intended to increase the level of damages awarded. When the Minister responds, I would be grateful if he would confirm that.
Liberal Democrat amendment No. 155, which we understand is also based on the work of David Kemp, QC, would cause
''periodical payments . . . in respect of damages for the cost of future care or medical expenses''
to be uprated by some index other than the RPI. That would virtually stop structured settlements in their tracks. It is difficult enough already to find any kind of insurance-based product that enables provision to be made for periodical payments, even increasing in accordance with the RPI. One insurance company has just closed its doors to new business of that kind in the past week, and another company is talking about limiting the range of products that it offers.
It is much more serious that continuing attempts are being made in the courts to persuade judges to allow future care costs at a much higher level. To date those attempts have not succeeded. There is also the anomaly, which was highlighted in the report made last week by no less a figure than the chief medical officer, Sir Liam Donaldson, that courts may not take into account treatment available under the NHS. That report received much coverage in respect of other issues.
There is a bar in section 2(4) of the Law Reform (Personal Injuries) Act 1948. In practice, one understands how that arises. One wants the best care available to be provided for those who have suffered
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an injury that is somebody else's fault. That bar has enabled claimants to obtain, where it is appropriate, what is virtually private hospital care, including 24-hour nursing care in their own home. If the Liberal Democrats were to succeed with amendment No. 155, that would have an enormous impact not only on the NHS, which cannot stand many more substantial increases in costs, but also on premiums for liability insurance. We are conscious of the fact that when the Liberal Democrats tabled a similar amendment in another place it was not pursued, either to a Division or on Third Reading. I hope that, having moved the amendment formally, and having been taken somewhat by surprise, the hon. Member for North Norfolk, will not pursue it.
Although the Medical Protection Society generally welcomes a move away from lump sum settlements to providing periodical payments to patients in clinical negligence cases, it has identified serious problems. I have met people from the society and I share their concerns. It is important to recognise that the society is a not-for-profit organisation that provides a range of membership benefits, including a occurrence-based indemnity against adverse awards of costs and damages in clinical negligence cases brought against NHS general practitioner members and those working privately. The society represents doctors, dentists and other health professionals. It has more than 114,000 members in the UK alone, and more than 200,000 members throughout the world.
The Medical Protection Society has identified difficulties with the Government's proposals, including the fact that reviews would create a continuing uncertain liability that would be difficult to manage. The society would need to increase its reserves to meet the possibility of an order for increased payments some 10, 20, 30 or 40 years after the initial settlement. The society is a mutual organisation that offers indemnity on an occurrence basis. Each year it collects from its members—our doctors, dentists and the other health professionals who treat us and all our constituents—the subscriptions needed to meet the expected liabilities arising from that year.
Reviewable settlements would introduce a huge degree of uncertainty about future liabilities and the Medical Protection Society would never be able to close its book on a case. It would have to decide whether to set subscriptions at a level that might leave its members underfunded in future, or raise them to such an extent that they would be overfunded. Either way, it would be our doctors, the vast majority of whom are in the NHS, who would bear the burden.
Although the legislation that introduces reviewable periodic payments might not be intended to be retrospective, I know from my professional background that criminal negligence claims are frequently not intimated—so nobody knows that there is a potential claim there at all—let alone litigated, until years after the events that give rise to them. One in five claims made against members of the Medical Protection Society—doctors such as GPs, dentists and other health professionals—in the years from 1996 until and including 1999, where the claim
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was valued at £0.5 million or more, related to incidents that occurred 10 or more years earlier. I hope that the Minister and other Committee members understand the point about the retrospective effect of what is being proposed.
The MPS provides indemnity on an occurrence basis: provided that the doctor was an MPS member at the time of the incident giving rise to the claim, they can apply for assistance, even if they have since left the society. For example, even if they have retired long before the claim is made, they are still covered. To ensure proper funding, it is essential that in each subscription year the MPS receives sufficient income to meet all the claims arising from that year, irrespective of when the claim is made. We do not want to have a situation where, as a result of well intentioned legislation, the Government are creating a medical negligence equivalent of the long-tail claims for things such as asbestosis that helped to cause all the problems in the Lloyd's market, which I am sure that the Minister and other Committee members remember.
I will now explain the background to our amendments in this group—amendments Nos. 105, 106, 108 and 107—by referring to a case that is well known to the professionals in this field. In 1995, Guy Parkes was awarded £1.25 million for severe brain damage that he had suffered as a baby in 1962, 33 years previously. When Guy Parkes was an infant, his mother had consulted her GP because of breast abscesses. Unfortunately, the GP failed to notice that Guy was dehydrated and the mother claimed that she was advised to continue breastfeeding. Guy became severely dehydrated; that led to brain damage, which resulted in spastic quadriplegia. Many years later, Guy broke his leg in a care home and his family took legal action over that accident. The solicitor instructed in connection with that much later incident also investigated the circumstances that had led to Guy's brain damage 25 years previously, which led to the fresh claim.
The Guy Parkes case demonstrates how long it can take, in certain circumstances, to bring and settle a claim. At the time of Guy's original injuries in 1962, the MPS subscription was only £2. A similar case brought in years to come, after the introduction of reviewable settlements, would present the society with the challenge not only of funding the settlement but of putting aside further funds for a possible future review despite the fact that a settlement review would not have been an eventuality that was anticipated when the subscriptions for the relevant year were set. The retrospective nature of the proposals threatens the whole basis of the way in which the burdens are set on the current generation of MPS members. Its current members would have to pay sums in addition to the subscription. The MPS would have to fund claims arising from current and future incidents and meet additional liabilities incurred by the imposition of retrospective settlements.
The claimant's perspective is central. I have talked a lot about protecting doctors and dentists and the
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society that represents them, but we must always look carefully at, and remember, the claimant's perspective. Even from that perspective, the vast majority of patients who have received a settlement do not wish to continue an adversarial relationship with defendants. They normally want to have a clean break. When the court reaches a settlement, that should be it. That can be provided—and often is now—by structured settlements, but not by reviewable structured settlements. Most defendants would not have the resources to keep track of the changing circumstances of claimants whose financial needs may diminish or increase.
In practice, unless our amendments are accepted, the way in which the changes are being put forward will result in awards being increased, but seldom, if ever, decreased. Nevertheless, claimants would have a fear that they might be under the continuing observation of defendants, and that itself might create a disincentive to recovery.
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Even if the conditions on which a review could take place are narrowly defined now, the opportunity to widen those conditions at a later stage could result in spiralling clinical negligence costs for the NHS. I should have thought that that would be of great concern to the Government, as well as to mutual organisations such as the Medical Protection Society or insurance companies.
For cases involving the NHS, which has to fund the payments on a pay-as-you-go basis, there is a real threat of spiralling expenditure in exactly the same way as we have seen in countries such as America, and that would erode the funds available to treat patients on the NHS. I hope that when the Minister responds, he will say that he will consider some of the measures that we are proposing and talk to the new Secretary of State for Health and his officials about them. The Minister will realise that we are raising a serious point, with wide implications for Government expenditure generally.
I want to outline briefly a couple of case studies, which I hope will help the Committee to understand the basis of our amendments. The two case studies will demonstrate the extent to which the lawyers acting for a claimant might argue for settlements to be reviewed. The first case study concerns failure to inform. Let us suppose that a patient with severe rheumatoid arthritis attends a specialist rheumatology clinic at her local hospital and is prescribed an anti-TNF drug, such as enbrel or remicade. The patient later develops a plastic anaemia and then takes action against her doctor for failing to inform her of the risk of developing the condition as a side effect of the prescribed drug. The claimant wins damages, paid by means of a structured settlement for continuing care costs.
So far so good, one might say. However, if the Bill is not amended, in settling the claim, the patient's solicitor is likely to argue that the settlement should be reviewable at a later stage, because the patient might develop other side effects of the drug. First, the patient might develop formation of autoimmune antibodies. Secondly, the patient might develop TB. Thirdly, the
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patient might develop heart failure. Fourthly, the patient might develop infections. Fifthly, the patient might develop malignancies. If the Bill were not amended, such arguments would be—perfectly reasonably—put forward on behalf of the patient.
The second case study is that of the failure of a dentist extracting a tooth to provide antibiotic care for his patient who has a heart condition and is therefore vulnerable to infection. As a result of the oversight, the patient develops sub-acute bacterial endocarditis and suffers a small stroke, which affects his balance and his ability to work. Because of his loss of income and ongoing health problems, the patient would then take legal action against the dentist. In that scenario, the claimant's lawyer would argue for a review to take place in case there is a recurrence of the condition and the patient may require further treatment, heart surgery, or may suffer a stroke.
There is a need to ensure that the Government amend the Bill to take into account the risks that I have mentioned. Amendment No. 108 says:
''An order under this section shall apply only to cases in which it is admitted or proved to be a significant prospect of serious deterioration, or development of a serious further medical complication . . . consequent from the act or omission which gives rise to relevant cause of action, as identified by the medical evidence before the court.''
If the Government were to accept such an amendment, that would be helpful to the Bill, because it would provide some reassurance.
Amendment No. 106 would insert the words,
''save that this provision does not apply to any case in which the injuries involved occurred prior to the date on which the provisions of this Part of the Act comes into force.''
The Bill would then have a provision that ensured that the element of retrospectivity that I have talked about would not exist. For the reasons that I have set out, the Liberal Democrats are mistaken in their attempts to introduce amendment No. 155. Our amendments Nos. 105, 106, 107 and 108 would improve the Bill substantially because they would remove some retrospectivity and achieve what the Government want while reducing the risks to which I have referred.
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