NHS Resolution, which handles legal claims against secondary care providers, spent an extra £404m on clinical negligence payouts last year solely related to the discount rate cut.
The total cost of payouts relating to clinical claims was up by close to one-third to £2.23bn in 2017/18, from £1.71 bn in 2016/17.
According to the report, this comes despite ‘clinical claim numbers’ having ‘stabilised after many years of significant growth’ – however payouts have grown in size including some at £20m.
The discount rate, which when lowered increases the cost of long-term clinical negligence compensation payouts, was cut from 2.5% to minus 0.75% last year sparking warnings of rising costs of GP indemnity cover.
GP medical defence organisations told Pulse that they anticipate a similar impact on GP claims as NHS resolution has reported.
Dr Christine Tomkins, Medical Defence Union (MDU) chief executive, said: ‘The cost of clinical negligence claims continues to spiral out of control and it is no surprise that, while NHS Resolution has seen claims numbers stabilise, in 2017/8 it paid out a record £2.23 billion compensating patients through its clinical negligence schemes…
‘The MDU has seen the dramatic effect of the 3.25% [personal injurcy discount rate] decrease on GP claims too. NHS Resolution has already made individual compensation awards worth well over £20 million, a sum which would have been unthinkable until quite recently.’
Emma Hallinan, director of claims policy and legal at the Medical Protection Society (MPS), said: ‘While there has been a small but welcome reduction in the number of new clinical negligence claims… it is concerning to see a 30% increase in spend over the course of one year.
‘Of the £520m increase, £404m is due to the change in the personal injury rate (PIDR).
‘It is right that there is reasonable compensation for patients harmed following clinical negligence, but a balance must be struck against society’s ability to pay. Legal reform is required to strike a balance between compensation that is reasonable, but also affordable.’
Under the new Civil Liability Bill, the ‘discount rate’ will be based on ‘low risk’ rather than ‘very low risk’ investments, as is currently the case, which the Ministry of Justice said better reflects the actual investment habits of claimants.
The discount rate is used to calculate the final financial compensation for victims of serious personal injury according to the amount they can expect to earn by investing it.
The news comes as the Department of Health and Social Care has said a state-backed indemnity solution for GPs will be introduced from April next year, although it failed to meet a deadline to update GPs with further details on the scheme in May.
The DHSC announced the scheme last year, after acknowledging that high costs of medical negligence cover were impacting GPs’ ability to work.