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Baroness Finlay of Llandaff moved Amendment No. 152:

"( ) An order under subsection (1) may not apply to injuries that occurred prior to the date on which sections 2, 2A and 2B came into force."

The noble Baroness said: My Lords, I have listened with great interest to the debate on amendments in this clause. As the noble Lord, Lord Goodhart, has summarised, in Committee I raised concerns about the impact of settlement reviews on patients. I highlighted that an ongoing adversarial relationship between the patient/claimant and the defendant might act as a powerful disincentive to recovery and may even promote ongoing worsening of the patient's overall condition physically and psychologically. It will prevent closure on an incident for both patient and clinician.

I accept that the Government have taken a firm position on the proposal to vary periodical payments and therefore seek to minimise the damaging impact of

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this measure on those involved in clinical negligence cases by proposing an amendment which will make the legislation prospective rather than retrospective.

As currently drafted, Clause 92(2)(b) will apply to all cases settled after the Bill comes into force even if the negligent act occurred over 20 years ago. There is often a significant time lag between when a negligent act occurs, when it is reported and when a claim for compensation is finally settled. According to the Medical Protection Society, one in five claims, where the claim was valued at 500,000 or more, made against their medical members between 1996 and 1999 related to incidents which occurred 10 or more years earlier.

This is an important point for medical defence unions offering indemnity on an occurrence basis. Doctors belong to a defence union and their indemnity is occurrence-based; so provided the doctor was in membership at the time of the incident giving rise to the claim, he or she can apply for assistance even if membership ceased before the making of the claim. To ensure proper funding for claims, it is essential that in each subscription year sufficient income is secured to meet all the claims arising from incidents in that year, irrespective of when the claim is made.

As a consequence, the introduction of rules applying to new claims rather than to new injuries is retrospective, as the rules would apply to years where subscriptions have already been set and collected. Defence union organisations such as the Medical Protection Society, the Medical Defence Union and the Medical and Dental Defence Union of Scotland will not have had the opportunity to set and collect subscriptions at a level that would encompass the costs of having settlement reviews.

In contrast, the Health and Social Care (Community Health and Standards) Bill currently being considered in the House of Commons introduces the concept of recovery of NHS costs in clinical negligence cases. It will apply to injuries which have occurred only after the date the legislation comes into force. The Department of Health has accepted that it would be unfair on those insurance companies or not-for-profit organisations which fund the cost of claims to be "caught" for accidents that had taken place long before the measure was even conceived.

If new Section 2B in Clause 92 of the Courts Bill is agreed without amendment, we shall have two new pieces of legislation relating to clinical negligence that take effect in completely different ways. The Courts Bill will impact on injuries that happened many years ago, while the Health and Social Care (Community Health and Standards) Bill will affect injuries that occur only after the Bill is enacted in 2004. The amendment I have proposed would address that inconsistency. If accepted, the proposals to introduce settlement reviews will become truly prospective and thus will reflect the stance that has been embraced by the Department of Health. I beg to move.

Lord Hunt of Wirral: My Lords, I wish strongly to support the amendment moved by the noble Baroness, Lady Finlay of Llandaff, and to say that I believe that

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she has put forward a persuasive argument, in particular over the anomaly between the two Bills. It is surprising that the Health and Social Care (Community Health and Standards) Bill should be framed so differently from the Courts Bill. It may be that the Minister will want some time to reflect on that, but it is a curious anomaly.

I wish to add my concerns to those expressed by the noble Baroness about the element of retrospection involved in the present provisions. It makes the task of medical defence societies and insurance companies in general very difficult indeed if they are to be faced with retrospective changes to legislation which alter substantially the law on damages. As the Minister will know, it is something in respect of which many representations have been made in the past. The system should be much clearer and more precise. When changes are proposed, they should take effect only so far as the future is concerned rather than seeking to claw back what can be up to 20 years before a claim needs to be made in the first place. That is particularly true in cases involving minors. That is because there is a three-year limitation period coming on to 18 years which may or may not have elapsed in whole or in part.

I hope that the Minister will be able to respond positively to the serious concerns which have been raised.

6.45 p.m.

Lord Chan: My Lords, I support the amendment moved by my noble friend Lady Finlay. As the noble Lord, Lord Hunt, pointed out, it is important to ensure that there is no anomaly between this Bill and the Health and Social Care (Community Health and Standards) Bill. Another point should be made about retrospection. In maternity cases and those involving new-born babies, the 20-year rule is making it extremely difficult to recruit into the relevant professions, although the need for doctors, nurses and midwives in our hospitals continues to grow.

Further anomalies could arise when we take into account the advances in medical care over a period of 20 years. It would be disastrous and bad for the morale of the medical professions and the National Health Service if old cases were to be reopened. Advances in care would mean that cases that had been adjudicated in the past would today no longer be cases with a valid claim of negligence because we have better means of treatment as well as better procedures and guidelines. I support my noble friend's amendment.

Lord Colwyn: My Lords, I, too, support this amendment. I welcome the move away from lump-sum settlements and the provision of periodic payments to patients in clinical negligence cases, but the Government must be realistic about reviews which would create a continuing uncertain liability.

The defence organisations, which are non-profit making, would need to increase their reserves to meet the possibility of an order for increased payments

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between 10 and 40 years after the initial settlement. For many years I served on the council of the Medical Protection Society and later chaired the dental side of that organisation. It is a mutual body for which subscriptions are collected from members on an annual basis to meet the liabilities arising from that year. The provision of reviewable settlements would introduce huge uncertainty about future liabilities, leaving members either over-funded or under-funded. That burden would have to be borne by the individual doctor.

These costs already represent a tremendous burden. In certain parts of the country it is difficult to encourage doctors to work in obstetrics. Although the legislation introducing reviewable periodic payments is not intended to be retrospective, clinical negligence claims are not normally initiated, let alone decided, until years after the incident. I hope that the Minister will be able to respond positively to the amendment.

Lord Goodhart: My Lords, I do not have anything to add to what has already been said by noble Lords who are far more competent to speak on these issues from a professional point of view. I wish simply to endorse what has been said by all the speakers. I hope that the Government can see their way to giving some satisfaction as regards the arguments put by the noble Baroness, Lady Finlay of Llandaff.

Baroness Scotland of Asthal: My Lords, I thank the noble Baroness, Lady Finlay of Llandaff, and the noble Lords, Lord Chan and Lord Colwyn; those noble Lords bring to the debate the expertise of practitioners in the field. However, obviously they also bring the attendant anxieties. I hope that I shall be able to explain why the Government have taken the view as set out in the Bill, and that I shall be able to allay some of that anxiety.

Amendment No. 152 would limit the application of an order allowing variation to injuries which occurred after the date on which new Sections 2, 2A and 2B came into force. I am grateful to the noble Baroness for making me aware of her concerns on this issue in advance of our debate. I thank her for that courtesy.

In Committee I explained that although we recognise the general concerns expressed about the "retrospective" effect of legislative change, and the fact that these cases can sometimes take several years to settle, where the court makes a variable periodical payments order, insurers and medical defence organisations should be able to reserve or reinsure against it, as they do now in regard to provisional damages orders. I want to emphasise the fact that, in introducing periodical payments, we are not seeking to change the basis of liability, but rather we seek to change the way in which people are paid. So the issue of liability rests where it is.

If the provisions relating to the court's power to vary periodical payments applied only to injuries occurring after the date of commencement, it could be several years, as the noble Baroness said, before the provisions took effect. In the meantime, in some cases where variation was appropriate, awards would continue to have to include provision for events which might never

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occur and claimants would continue to be left significantly under-compensated or over-compensated. In other cases, the court would be forced to order a provisional damages lump sum even though periodical payments were more suitable.

I understand and recognise that the provisions of the Health and Social Care (Community Health and Standards) Bill relating to the recovery of NHS costs will take effect differently to the provisions in the Bill relating to periodical payments. However, I hope that the noble Baroness, Lady Finlay of Llandaff, will understand that different considerations can apply when deciding the most appropriate implementation date for any legislation. For example, the introduction of the recovery of NHS costs in clinical negligence cases is a new cost which insurers and medical defence organisations have not previously had to meet, whereas the limited degree of variation that we propose will not introduce any new liability for damages. It is simply a different, and we believe fairer, method of paying for uncertain future costs.

There is agreement around the House that where periodical payments can be made it can quite often inure to the advantage of claimants, who will have the security of knowing that the lump sum will not run out. They will have a set amount of money for every month that they live. They will not have to ask horrible prognosis questions about longevity and expected life span. I am sure that noble Lords who have been directly involved in such clinical assessments know how difficult and painful it can be for the claimants involved. They will know also how complex it can be for a competent clinician to make an accurate assessment. Some people have the great advantage enjoyed by the noble Lord, Lord Renton, who gets riper and richer every year; other people, half his age, struggle—particularly on these Benches. I speak, of course, entirely for myself and not for any of my noble friends.

We know that there are such difficulties. We believe that periodical payments will assist claimants and will not impact in the negative way feared by the noble Baroness. I hope that she will be satisfied with that answer and feel able to withdraw her amendment. We understand why this issue has caused anxiety. I am pleased to be able to make this response in the hope that it may allay some of the anxieties of clinicians.

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