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Over-compensation and the risk of double recovery are two of the key issues raised by the recent consultation paper proposing changes to the law on damages. Sarah White, partner at law firm Browne Jacobson, believes that the Government's proposals do not cover all the key areas in which reform is required. In particular the Government must address the impact on recoverable damages of rules relating to NHS and social services care provision.
“One of the key arguments that is currently exercising the minds of the legal and insurance sectors concerns the complex issue of damages. We need to establish a system whereby fair financial compensation is awarded to claimants without the risk of double recovery. The current system allows claimants to recover for losses twice where collateral benefits such as insurance or pension payments are received. Where care is involved, it is open to a claimant to secure a substantial sum of damages and still obtain state funded care provision.
“While the recent paper on changes to the law on damages contains much that is sound and sensible, the proposals would continue to allow double recovery in relation to collateral benefits and the issues surrounding provision of care are not dealt with fully. This is a missed opportunity to deal comprehensively with the problems arising in relation to damages for care and Browne Jacobson urge the Government to undertake a broader review of this area.
"There is a clear public interest in clarifying the law in these areas, given that most damages awards are funded by insurance companies or public bodies and so, indirectly, by the public – ie the taxpayer or insurance premium payer.
"The statutes and regulations relating to entitlement to NHS and social services care are notoriously complicated. They have been described by one judge as 'some of the worst, if not the worst, drafted and most confusing subordinate legislation it has ever been my misfortune to encounter'1. A full review of this complex regulatory framework is required and this is the opportunity to do so.
"With clearer regulations this area of law will become much more transparent and all those involved in claims as well as care providers will benefit from a better understanding of their entitlements and obligations. The current system is open to abuse, or perceived abuse, partly because it is so difficult to penetrate the regulations. Evidence as to whether or not this in fact occurs is limited, but it is unsatisfactory that the current law has no clear and consistent way of dealing with the risk, given that any overpayment is ultimately funded by the man in the street.
"While the Government is suggesting a system whereby defendants would fund actual ongoing care themselves, this presents a number of significant problems, in terms of access to care, logistical aspects of care delivery and value for money. Browne Jacobson do not feel those proposals are workable in practice.
“In our view, the approach currently adopted by the Government and the courts is not wholly wrong; it simply needs some careful modification to take into account the complexity of providing for the evolving care needs of claimants. To this end, we are recommending that evidence surrounding the claimant's care needs and the availability of statutory services should be routinely considered by the courts – a move that would not require any change in the law. We also consider that in complex cases where care needs are likely to change, a form of capped or reverse indemnity should be encouraged, which would allow damages to be assessed in a timely and cost effective manner, while preventing the risk of double recovery.
“Complex issues such as the award of damages will rarely be solved via a series of retrospective measures. Looking ahead, we would rather see a system whereby judges are given the relevant tools and more importantly, the freedom to make informed decisions on a case by case basis.”
Footnotes
1. Mr Justice Munby in Ryan v Liverpool Health Authority, QBD, 10 September 2001
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