Decision to drop appeal in medical negligence case could cost NHS £1.5bn

The NHS Litigation Authority (NHSLA) has admitted that its decision to drop an appeal to the House of Lords in a crucial medical negligence case could cost the health service more than £1.5bn.

The Court of Appeal ruled earlier this year in Tameside & Glossop Acute Services NHS Trust v Thompstone [2008] EWCA Civ 5 that courts could link annual payments to victims to the cost of care rather than the retail prices index (RPI).

Historically the RPI has been much lower than the annual rise in earnings in the care sector.

Lee Thompstone, now aged nine, suffers from cerebral palsy as a result of lack of oxygen at birth. The NHS accepted liability and the dispute was solely over the amount of damages.

The NHSLA's petition for leave to appeal to the Lords was granted in April. However, earlier this month the authority informed claimants' solicitors that it had decided to pull out.

Speaking to Solicitors Journal, Stephen Walker, chief executive of the NHSLA, said he could not give a precise figure for the anticipated cost of the Thompstone case to the health service before the authority's accounts were laid before parliament.

However, he accepted that it would have a big impact on funding.

'When the case was in the High Court we put forward a good deal of actuarial evidence that the possible increase to our provision would be around £1.5bn,' he said.

At the High Court hearing in November 2006 Joe Monk, an actuary called by the NHS, estimated the cost in claims and potential liabilities to the health service at £1.678bn.

Asked why, given the huge cost implications, the NHSLA had decided to drop the case, Walker said the reason for contesting it was to clarify the law.

Since April 2005, the courts have been able to make orders for annual, periodical payments whether or not the parties agree, following an amendment to the Damages Act 1996 by the Courts Act 2003.

'The only reason we contested the case was to find out exactly what the Courts Act amendment to the Damages Act really meant,' said Walker.

'We think we know this now, and are accepting the status quo.'

Trevor Ward, senior partner of Linder Myers solicitors in Manchester, represented Thompstone.

He said he did not accept the NHSLA's figures on the cost of the case because no information had ever been produced showing the basis for the calculations.

However, Ward accepted the cost would be significant, and said he was mystified why the NHSLA had dropped its appeal.

'It is not something you expect after such a fight,' he said. 'I asked the other side's solicitor if he could tell me what the reason was, and he said no.'

Bevan Brittan, solicitors for the NHSLA, declined to comment.

Nicholas Bevan, solicitor in the Exeter office of Bond Pearce, which acts mainly for defendants, said the decision to drop the case would have as big an impact on insurers as on the NHS.

'From the defendant's point of view things will be much more expensive,' he said.

However it will produce some dividends for insurers, particularly where people predecease their life expectancy.'

Bevan warned solicitors that they must advise clients properly about periodical payments and, where necessary, refer them to financial advisers.