Ruling marks latest stage in battle over recovery of agency fees
A medical agency that failed to provide an adequate breakdown for the recoverable components of its profit costs has seen its part of the fee for a medical report reduced to zero.
However, His Honour Judge Wood in Liverpool, sitting with Regional Costs Judge Baldwin as assessor, rejected the argument that the defendant should not have to pay for the report itself because the fee note was from the agency and not the expert.
It marks the latest stage in the ongoing battle over the breakdown of medical agency fees.
Dempsey v Milton Keynes University Hospital was a clinical negligence claim that settled for £50,000. In the absence of an agreement on costs, part 8 proceedings were issued. The focus was on the fee for four expert reports, totalling £16,324.56 + VAT. Vouchers from Speed Medical were served with the bill in support.
The defendant’s points of dispute objected to the fees on the basis that the claimant failed to serve copies of the fee notes of the experts in accordance with PD 5.2(c) to CPR 47. They sought a breakdown between the expert’s and agency fee elements.
In the replies, the claimant refused to provide a monetary breakdown but, “by way of full and frank disclosure”, Speed Medical had confirmed its invoice was broken down as follows:
- Expert fee;
- Fixed operational fee – cost of the case handler etc dealing with the file;
- Referrer commission – “this is a commission fee if the law firm insist they want a separate agreement whereby a commission fee on instruction is paid to a third party marketing company usually (so the marketing agreement dictates what fee that is so varies with each firm/referrer)”;
- Finance fee – 6.5% pa for 3 years (“we offer the 3 years deferred terms”); and
- “Waive – the write off percentage a law firm requests so with each instruction they accumulate a fund in which they can utilise to partially reduce or fully write off any Speed medical invoice.”
It added that Speed’s profit costs were calculated, for an expert fee under £1,000, as 20% or £225 (whichever was the higher), or 20% capped at £600 for a higher fee.
Deputy District Judge Ellis assessed the four items on provisional assessment and the defendant requested an oral review, serving part 18 questions on the amounts claimed for each element of the items.
The claimant sent what was described as an “itemised medical fee note” setting out an amount for the expert fee and an amount for ‘Speed Medical Cost’.
This provided an illustration for arriving at the latter: “The above is a summary of the work undertaken in this matter based on the attached detailed listing. The time cost of work undertaken has been calculated using the pay band D, national grade 1 £141.60 (inclusive of VAT) hour, to illustrate the charges that would have been incurred if undertaken utilising the method of recovery or buy it had been undertaken by the instructing solicitors (sic). The actual fees charged based upon our standard fee basis model.”
At the oral review, the DDJ determined that Speed’s time elements were reasonable and proportionate but reduced its costs on two of the reports as she considered them too high.
On appeal, the defendant argued that, where a claimant has obtained a medical report through a medical agency, the claimant must separately identify the sum claimed in respect of the expert’s fees and medical agency’s fees.
HHJ Wood began by saying it was “unhelpful for the claimant’s costs draughtsman who prepared the bill of costs to make no direct reference to the involvement of an agency when identifying the costs at items 26 to 29, even if earlier items had claimed for work carried out in ‘dealing with the medical agency in respect of medical experts’.
“Whilst the subsequent dispute may not have been avoided altogether, at least it would have been clear what fee that was actually being charged by the medical expert, instead of the composite cost of obtaining the medical report.”
In any event, there was no doubt that the fee actually charged by the individual expert was properly identified here and there was no challenge to the reasonableness and proportionality of each one.
“However, a different consideration applies in relation to the agency fees,” the judge went on. Three of the five items in the Speed breakdown were irrecoverable as costs inter partes.
“Further, having sought to explain the process by which Speed Medical did actually calculate its profit costs, and then to have provided a detailed breakdown with profit costs which were said to be illustrative only, not only was the claimant providing an unreliable basis for assessing those profit costs, and creating a confusing picture for the court, but also there was a real risk that in making the assessment the court could be including irrecoverable elements and thus breaching the indemnity principle.
“This risk, in my judgment, could not be obviated simply by making a deduction between the clearly identifiable medical expert’s fee (inclusive of VAT) and arriving at a balance to understand what the claimed profit costs were… [T]he detailed breakdowns, in the light of the information which had been previously provided, did not enable the judge to make any assessment which could be considered to be reasonable and proportionate.
“Whilst the use of a broad brush in many circumstances is to be commended, this requires a clarity which simply does not exist here.”
This meant the ground of appeal was established in relation to the agency fees. “There was simply no adequate breakdown for the recoverable components of the profit costs of the medical agency, and the learned deputy judge had no basis upon which she could make any assessment.”
He assessed these costs at nil.
The defendant also argued that the claimant had to provide a copy of the expert’s fee note to comply with paragraph 5.2(c) of PD 47.
But HHJ Wood held that the requirement was to serve the fee notes of the experts which were actually in the possessionof the receiving party. Here the claimant has provided fee notes from the medical agency because her solicitors had not instructed the expert directly.
If evidence was provided that enabled the assessment, “in my judgment that is sufficient. I cannot accept that it could have been intended that any failure in the provision of a medical fee note directly from the expert providing the report would disentitle recovery of the proved cost by other means”.
Keoghs acted for the defendant and, in a note on the decision, said it was an important judgment for several reasons:
“Full particularisation of what is being claimed must be provided and evidenced. Absent this, referral fees, funding costs, and a hidden ‘slush fund’ (as DJ Baldwin called the ‘waive’) will continue to be systematically hidden and claimed as fees of a medical report obtained through an agency.
“The amount for the expert fee must be separately evidenced from the agency fee.
“Where the amount claimed includes irrecoverable elements, the amount for those elements must be identified and removed before assessment of the recoverable elements.
“Where there is any risk of including an irrecoverable element in any amount allowed upon assessment, the court should disallow the fees.”
Simon Teasdale (instructed by Keoghs) for the appellant. Charles Prior (instructed by Handley Law) for the respondent.