No-fault compensation – could it work in the UK?

Early this month the Health Minister Nadine Dorries told the Health and Social Care Committee that a no fault compensation system is under review and could involve all claims against the NHS. Her comments were made to the Select Committee which is looking at the safety of maternity services in England following issues arising at Shrewsbury and Telford and East Kent NHS Trusts.

Reference was made to the no fault system in Sweden which has a much lower level of maternity harm rates that that encountered in England. The Swedish model involves an avoidability test under which a claimant has to show that the injury could have been avoided. It is not clear if this is the preferred model under consideration or just one of several.

No fault compensation systems have been in place in several jurisdictions, notably New Zealand and Sweden and other Nordic countries for many years; New Zealand’s scheme dates back to 1974, Sweden’s to 1975. Similar schemes have from time to time been considered in the UK, in 2003 by the Chief Medical Officer in the report ‘Making Amends’ and most recently by the Scottish parliament  but have failed to gain traction on grounds of fears around overall cost and also potential infringements of Article 6 of the Human Rights Act.

Such schemes have not been without their problems, affordability (or lack of it in the longer term) being a prominent feature.

The size of the problem

In 2018/19 the NHS paid out some £2.4bn in claims for injury arising from clinical negligence which accounted for approximately 2% of the NHS budget.10% of the claims brought related to obstetric claims but they accounted for approximately 50% of sums paid out.

This is undoubtedly a large figure, however the fact that such a large proportion relates to obstetric claims begs other questions around what is happening in obstetric care to cause this.

The problem however is often articulated as not one solely about costs saving, and includes how we might improve the quality and safety of delivery of healthcare services, and access to justice for those injured as a result of substandard care.

Features of no fault compensation schemes

Most schemes have eligibility criteria and threshold levels of disability to qualify for cover under the scheme in place. Most also have caps on the level of cover. Although administrative costs are generally lower, the levels of compensation awarded are also considerably less than would be awarded under a tort based scheme such as that in operation in the UK.

The scheme in New Zealand applies to all personal injuries including motor accidents and work place injuries, and in fact was not set up with the main focus on medical claims.

Where schemes work best the healthcare system is generally mostly state run and there are comprehensive social welfare systems in place such as New Zealand. One might also add that they have also been in place for decades, before clinical negligence jurisprudence really developed.

There is still a need to establish causation which is often the most problematic issue in medical cases. In Sweden the avoidability test used is a low bar for a claimant to get over; the test is whether the injury would be been avoided if the patient had been treated by the best health practitioner. The test is one of excellence rather than adequate or reasonable care. The impact of that could be significant in terms of numbers of successful claims. Whether such a scheme with that aim actually leads to higher standards and fewer adverse incidents is far from clear.

Payments to patients are made by reference to a set of schedules and funded by insurance schemes taken out on a regional basis rather than by the State.

Pros and cons

Some of the pros which are touched on above are the obvious potential costs savings, although they are not always borne out in the longer term.

Such schemes are said to enhance access to justice, but in fact there are still large volumes of those injured who do not claim under the schemes; at similar levels to those who do not bring claims under a tort based system. The linking of levels of compensation to schedules or tariffs may be said to be inflexible and not delivering a fair result for injured individuals.

It is claimed that they deliver a resolution faster and aid in rehabilitation of those injured although that has also proved to be problematic in New Zealand.

In terms of facilitating improved standards, most schemes in fact separate professional disciplinary functions from compensation. The New Zealand scheme tied them together initially but had to reverse that in the face of hostility to the system from practitioners who faced referral to their professional body if a finding was made against them. In Sweden the schemes for provision of compensation and accountability are kept separate such that information gathered for the purposes of a compensation claim are kept separate to those for professional disciplinary purposes.

The cons seem to be that such schemes do not in fact necessarily deliver the costs savings hoped for over the longer term and may foster a compensation culture. There may well be Human Rights Act issues in the UK as previously identified.

Could we really see this rolled out in the UK?

What are likely to be the barriers to such a scheme in the UK is however multi-faceted. To shift from a tort based system underpinned with a large body of common law which has developed over the last 40 years or so to move to a no fault system delivering much lower levels of compensation not tailored to an injured individual’s needs would be a very hard sell.

If confined to those injured as a result of medical adverse incidents it would result in a 2 tier system of compensation – those injured in car accidents or at work for instance still being able to claim much higher levels of compensation through the courts.

The chief problem in the UK seems to be around the incidence and levels of compensation paid in obstetric claims. The causes are complex and NHSR has done, and continues to do a huge amount of work to analyse this and effect change.

There are levers that could be pulled in terms of how compensation is calculated to reduce the overall cost of claims, for instance changing the level of the current discount rate and perhaps reviewing how those injured are compensated by way of care packages. These are almost always costed at private rates, whether such packages are ever put into place or not.

Learning from mistakes is essential in a developed safe healthcare system, more important though must be to avoid them happening in the first place. Whether a no fault system of compensation for those injured as a result of a medical adverse incident is a way to achieve that goal is debatable.

Sarah Woodwark, Partner and Head of Healthcare, BLM

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