Written by Sarah Walls
Australia is not the only common law jurisdiction where there is dissatisfaction with medical negligence litigation as a means of delivering compensation for injured patients. In 2022 a House of Commons committee in the United Kingdom recommended that a no-fault compensation scheme be established for injuries incurred under the National Health Service (NHS). In Canada there have been repeated calls over the past 20 years to reform the negligence-based system of compensating injured patients. Even in the US, the most litigation-prone country on earth, there have been moves away from medical malpractice litigation. New Zealand is the only common law jurisdiction to have introduced no-fault compensation for personal injury (in 1974), and there has been no pressure to return to a negligence-based system. (Please support our petition for no-fault compensation for Australian injured patients.)
United Kingdom
In the United Kingdom the cost of negligence claims against the NHS rose by 9.5% in 2022-23 to a total of almost £2.7 billion. A spokesperson for the UK Medical Defence Union (MDU) said that the increase in damages was “because of a system for compensating patients that is no longer fit for purpose”. However, the MDU has “considerable reservations” about the most radical reform proposed by the 2022 NHS Litigation Reform report: a move to no-fault compensation.
The proposed no-fault scheme would have the following features:
· compensation awarded where the injury was avoidable, i.e., due to medical error or best practice not being followed;
· no caps on damages;
· lawyers not required;
· civil litigation rights retained but mandatory use of the no-fault compensation scheme first;
· standardised process of no more than six months, including an independent investigation involving both families and the NHS, implementation of safety recommendations, and communication of such lessons to the wider NHS.
· an initial pilot scheme covering birth-related injuries; if successful, the scheme would be extended to all compensation claims against the NHS. (Birth-related claims are among the most complex and expensive of clinical negligence claims: in 2022-23, obstetric claims against the NHS accounted for 13% of clinical claims but 64% of claims by value.)
The NHS Litigation Reform report says that litigation costs 2% of health expenditure, whereas the New Zealand and Swedish no-fault schemes cost 1%. Evidence was given that international administrative compensation schemes on average cost 12% to 18% of scheme expenditure, with the rest being compensation. All the international administrative systems for which there is data are cheaper in terms of their cost per capita, their cost as a percentage of GDP and their cost as a percentage of total health expenditure.
Canada
In Canada, as in Australia, the only way for an injured patient to obtain compensation is through the courts. The repeated calls for system reform include a statement released by the Québec College of Physicians in 2019 calling for no-fault insurance for victims of malpractice. In 2021 four Canadian academics published an article graphically illustrating why no-fault compensation for injured patients was needed. For the estimated 100,000 provider-error injuries occurring in Canada each year, 900 malpractice suits are brought annually, 38% of which succeed. In other words, only 0.34% of patients harmed by avoidable errors are compensated. Since 2004 Canadian provinces have subsidised 80% to 100% of physician premiums for liability cover. “The result”, said the article, “is that when an injured patient files a lawsuit against a physician, the taxpayer is funding one side of the legal dispute, leaving the patient to single-handedly fund the other side.”
In response, the Canadian Medical Protective Association, which covers 95% of Canada’s physicians, argued that no-fault schemes have been successful mainly in countries that have extensive social welfare systems, which Canada does not have. Such a model, it said, would require significant investment in community care resources and would not enhance patient safety.
United States
In the United States, Florida and Virginia both have no-fault compensation schemes for birth-related neurological injuries. A number of healthcare organisations have also established Communication and Resolution Programs (CRPs), which encourage disclosure and apology by healthcare providers when patients are injured, and sometimes include offers of compensation. Stanford University has reportedly saved $3.2 million in insurance premiums since introducing its CRP. CRPs are thought to be one of the factors contributing to the 55% fall in US malpractice payments between 1992 and 2014. Even in the US, injured patients have relatively low chances of obtaining compensation, with around 80% of medical malpractice suits being won by defendants.
International evidence on fault-based vs. no-fault compensation schemes
In 2008 Karen Armstrong and Daniel Tess, of Australia’s Institute of Actuaries, published a review of the international evidence on fault-based and no-fault compensation schemes. They reported: “Studies in the US have shown that only 17% to 26% of medical injuries involve provider negligence and that only 6.25% to 16% of negligently injured patients obtain any compensation through the tort system.”
The two actuaries found that no-fault personal injury schemes covered a significantly higher portion of injuries than fault-based personal injury schemes, except for the medical injury subset, where there was evidence that few injured claimants received benefits under either scheme type. Overall, the evaluation concluded that no fault schemes came out ahead, “with a higher portion of claimants covered, a higher portion of scheme cost going to claimants, better claimant outcomes, a more equitable distribution of claimant outcomes and a similar level of scheme costs, average benefits and prevention effects. This needs to be weighed up against potentially less equitable allocation of scheme costs and the freedom of people to pursue tort law remedies in response to their injuries and grievances.”
Armstrong and Tess said that it was often the underlying scheme features which drove these outcomes rather than the simple issue of fault versus no-fault: “Periodic benefits, with appropriate access to case management of claims and rehabilitation, can achieve better claimant outcomes than similar lump sum schemes. Appropriately structured premium rating systems may help to achieve the desired ‘deterrent’ effect to reduce the incidence of injury and ensure an equitable allocation of costs to those parties with the highest risk. Adversarial processes can be kept to a minimum to help manage legal costs and improve claimant outcomes.”
Could artificial intelligence eventually accelerate a move to no-fault compensation?
Artificial Intelligence (AI) systems are increasingly used to analyse diagnostic imagery and plan treatment. As a 2021 article in the journal Health Care Analysis argued, “AI systems will be introduced when they make fewer errors than [healthcare professionals], not when they are perfect.” For example, a British eye hospital has used an AI algorithm to detect and diagnose serious eye conditions, and the system was accurate 94% of the time.
The authors argue that it is very unlikely that healthcare professionals will be able to pick up all or even most of the errors made by an AI system in daily clinical practice. Establishing negligence in cases of AI error will be extremely complex, and it would be much simpler to use a no-fault system in which the patient merely has to establish that there was an unexpected healthcare outcome and that that outcome was harmful. The authors predict that if no-fault compensation is introduced for AI error, it may cover an increasingly large fraction of all claims made, and eventually pave the way for a complete switch to a no-fault system.
The vast majority of injured patients are left uncompensated by negligence-based systems
It is clear that the percentage of injured patients compensated through medical negligence claims is minuscule: 1–3% in Australia, 0.34% in Canada. The percentages are probably similar in the United States and the United Kingdom. The public believes that if someone is injured by medical treatment, they will be compensated. In the vast majority of cases, this simply isn’t true. Even in a no-fault system, not all injured patients will be compensated. But their chances of compensation will be better, as no-fault schemes have been demonstrated to be faster, cheaper and fairer.
In a negligence-based system, the primary purpose of medical indemnity insurance is not to compensate injured patients. It is to defend the insured parties, i.e. health practitioners and hospitals, if they are sued for negligence. The fact that there are a substantial number of adverse events in hospitals, and that the vast majority of injured patients go uncompensated, is of little interest to the insurance companies which defend claims. Their objective is to limit as far as possible the number and size of compensation payouts in order to maximise profits.
Please encourage everyone you know to sign and share our petition. The more people sign, the greater the chance that politicians will act on no-fault compensation for injured patients. It is time that injured patients cease to be hidden from view.
We are very grateful for your continuing support.
Sarah and Vickie
References:
United Kingdom: https://www.bmj.com/content/382/bmj.p1688
https://committees.parliament.uk/publications/22039/documents/163739/default/
Canada: www.ncbi.nlm.nih.gov/pmc/articles/PMC8437250/pdf/policy-17-030.pdf
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8437250/pdf/policy-17-030.pdf
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8437253/pdf/policy-17-042.pdf
United States: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5470361/
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9761461/pdf/futurehealth-9-3-230.pdf
Review of the international evidence on fault versus no-fault: https://actuaries.asn.au/Library/Events/GIS/2008/GIS08_3d_Paper_Tess,Armstrong_Fault%20versus%20No%20Fault%20-%20reviewing%20the%20international%20evidence.pdf
Artificial intelligence and no-fault compensation: https://link.springer.com/article/10.1007/s10728-021-00430-4