Clinical negligence recoverability survives appeal court test

The new proportionality test and introduction of qualified one-way costs shifting have not changed the principle that clinical negligence claimants can continue to take out after-the-event (ATE) insurance for expert reports when they enter into CFAs, the Court of Appeal ruled this week.

As a result, premiums will still be recoverable even if the case settles before the reports are commissioned, it said, upholding the principle established in the pre-LASPO case of Callery v Gray.

In Peterborough & Stamford Hospitals NHS Trust v McMenemy & Ors [2017] EWCA Civ 1941, the court also called on the Civil Procedure Rule Committee to introduce rules or a practice direction to govern the recovery of ATE in clinical negligence cases.

The appeal judges rejected the argument that courts should now decide on a case-by-case basis whether it was reasonable and proportionate for the claimant to take out ATE.

Lord Justice Lewison said: “I have not been persuaded that we should depart from the policy decision taken in Callery v Gray and examine the reasonableness of taking out ATE insurance on a case-by-case basis. Nor am I persuaded that the new proportionality test requires a case-by-case approach.

“It is clear from the government’s formal response to Sir Rupert Jackson’s recommendations that, ‘for reasons of public policy’, the government decided to exclude ATE insurance premiums relating to the cost of expert reports in clinical negligence cases from the general abolition of their recovery.”

However, he said it was still open to a defendant to argue that it was unreasonable or disproportionate to take out that particular policy.

“The old practice direction directed consideration to the question whether any part of the premium would be rebated on early settlement, and it may be that it would be unreasonable in some cases to take out a single premium policy rather than one with stage payments; or one with the possibility of rebated premiums.

“But those questions go more to whether the amount in question was reasonable or proportionate rather than to the question of principle whether ATE insurance may be taken out at all at the outset. Questions relating to quantum are not before us and are, we were told, due to be considered by this court in another test case.”

Lewison LJ said it was “unfortunate” that the rules committee took the view that there was no need for rules or practice directions dealing with the recovery of ATE insurance premiums in clinical negligence cases.

“[I] would invite them to reconsider the question. At the moment, however the pieces of the jigsaw puzzle are manoeuvred, they do not all fit properly.”

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Nick Bacon QC & Rupert Cohen (instructed by Just Costs as agents for Fletchers and Ashton KCJ respectively) represented the claimants in the two cases, with Roger Mallalieu (instructed by Acumension) for the NHS trusts.

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Costs News
Published date
29 Nov 2017

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