RECOVERY OF THE INSURANCE PREMIUM IN CLINICAL NEGLIGENCE CASES: 10 KEY POINTS
The recent post on the decision in Nokes -v- Heart of England Foundation Trust  EWHC B6 highlighted the issues relating to recoverability of the premium in clinical negligence cases. Here is a 10 point summary:
1. ONLY THAT PART OF THE PREMIUM RELATING TO REPORTS ON LIABILITY IS RECOVERABLE
The starting point is The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No 2) Regulations 2013. Regulation 3 states that the part of the premium is recoverable, the recoverable amount “shall not exceed that part of the premium which relates to the risk of incurring liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence in connection with the proceedings.”
2. A POLICY THAT HAS TWO PARTS,ONE DEALING WITH LIABILITY EXPERTS THE OTHER DEALING WITH ALL OTHER ASPECTS OF THE CASE IS STILL VALID
There was a somewhat complex argument in the Nokes case that a policy that referred to two premiums, one for the liability experts, the other for the rest of the case, was not compliant. The judge held that that particular policy was compliant.
3. IT IS NOT REASONABLE SUGGEST THAT A CLAIMANT SHOULD NOT TAKE OUT A POLICY AT ALL
See paragraph 98 of the Nokes judgment.
4. THE COURT DOES NOT START FROM A PRESUMPTION THAT THE ATE PREMIUM IS EITHER UNREASONABLE IN AMOUNT OR DISPROPORTIONATE
It is for the defendant, as paying party, to advance a viable case to the effect that the amount of the premium is either unreasonable or disproportionate. Once that is established and (where costs on being assessed on the standard basis) any doubt is resolved in favour of the defendant (paragraph 99).
5. THERE MUST BE SOME SOUND BASIS FOR ARGUING THAT THE ATE PREMIUM IS UNREASONABLE IN AMOUNT
6. ARGUMENT BY DEFENDANTS BASED ON GENERAL OBSERVATIONS ABOUT CLNIICAL NEGLIGENCE CASES IN GENERAL IS NOT HELPFUL
7. IT IS NOT INCUMBENT UPON THE CLAIMANT, IN EXPLAINING A DELEGATED AUTHORITY TEAM, TO PRODUCE OVER-DETAILED EVIDENCE
In the Nokes case Temple provided some evidence of how its policy was calculated. the judge accepted that Temple applied its experience of years in the ATE market to produce a post-April 2013 policy “that was intended to be viable and competitive”
8. IT “REMAINS INAPPROPRIATE FOR A COSTS JUDGE TO … SUBSTITUTE HIS OR HER JUDGMENT FOR THAT OF AN UNDERWRITER AND SUBSTITUTE HIS OR HER OWN PREMIUM FOR THE UNDERWRITER’S”
9. IT IS NOT APPROPRIATE FOR A COSTS JUDGE TO COMPARE CHALK WITH CHEESE
“I cannot accept that it is appropriate for a Costs Judge to entertain broad comparisons of two entirely different types of policy, encompassing different risks, in order to come to a wholly uninformed conclusion that one of them should be less expensive than it is.” Paragraph 117.
10. A PREMIUM, STANDING ALONE, CANNOT BE REDUCED ON THE GROUNDS THAT IT IS “DISPROPORTIONATE”
- In my view it is questionable whether it is right to single out a particular item of cost in applying the post-April 2013 proportionality test. The intention of Jackson LJ, when introducing that test, was that the proportionality of costs as a whole would be considered after costs have been assessed by reference to reasonableness, at which point to court might take the view that the remaining total is still disproportionate and reduce it to a proportionate sum
Paragraph 3 of The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No.2) Regulations 2013.
Costs order may require payment of an amount of the relevant part of the premium
3.—(1) A costs order made in favour of a party to clinical negligence proceedings who has taken out a costs insurance policy may include provision requiring the payment of an amount in respect of all or part of the premium of that policy if—
(a) the financial value of the claim for damages in respect of clinical negligence is more than £1,000; and
(b) the costs insurance policy insures against the risk of incurring a liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence (or against that risk and other risks).
(2) The amount of the premium that may be required to be paid under the costs order shall not exceed that part of the premium which relates to the risk of incurring liability to pay for an expert report or reports relating to liability or causation in respect of clinical negligence in connection with the proceedings.