The Medical Innovation Bill, set to redefine clinical negligence and encourage experimentation, is pitting lawyers and the Government against doctors. We ask whether it is good news for insurers in the healthcare and life sciences sectors.

Some think that the current state of the law means doctors are too scared of litigation to try new procedures that could save lives. Others think that the law achieves the right balance between protecting patients and promoting scientific advances. This debate has rumbled on for years but the law may be about to change if the Medical Innovation Bill, proposed by Lord Saatchi and currently before the House of Lords, is passed by Parliament.1

Insurers have their own concerns. Hand in hand with doctors and hospitals, insurers have borne the brunt of the rise of the compensation culture, driven by claimant lawyers financed by “no win, no fee” arrangements. On the face of it, a change in the law to give doctors more freedom would be welcome news. But the fierce debate over the Bill shows that the consequences of the proposed legislation are difficult for insurers to predict.

Does the law need to change?

Whether or not you think the law needs to change may depend on who you are. If you are a patient battling an incurable disease, as Lord Saatchi’s wife was, and find that doctors are not willing to try untested treatments, you may strongly support a change in the law. It could allow doctors to experiment to find a cure for your condition instead of waiting for clinical trials to run their course over several years.

Lord Saatchi’s supporters, which now include the Government, think that the current law stifles innovation. At the heart of the debate is the “Bolam” test.2

Since the 1950s the courts have applied this test to determine if a doctor has breached the standard of care he owes to patients. A doctor is not necessarily negligent if he conforms to a practice accepted by a responsible body of opinion. The effect of this rule is that doctors can be reluctant to depart from established protocols for fear of being sued in actions for negligence. From a legal perspective, it is safest to treat patients solely according to recognised protocols. Whilst this means that patients are protected from the risks of experimental, or “quack” medicine, the flip side is that a risk-conscious medical professional will steer clear of unusual approaches. As Lady Butler-Sloss put it (when President of the Family Division of the High Court): “The Bolam test ought not to be allowed to inhibit medical progress. And it is clear that if one waited for the Bolam test to be complied with to its fullest extent, no innovative work such as the use of penicillin or performing heart transplant surgery would ever be attempted.”3 Lord Saatchi’s Bill tackles this concern head on. In its own words, the Bill would “encourage responsible innovation in medical treatment” by giving legal protection to doctors who try novel procedures or treatments when standard treatments have not worked.

On the other hand, luminaries of the British medical profession have lined up to condemn the Bill, arguing that it would put patients in danger. Mark Porter, chair of the British Medical Association, has warned that “by needlessly watering down the law we could put patient safety at risk by removing important protections and potentially encouraging reckless practice.” David Nicholl, consultant neurologist, fears that if the Bill becomes law it will “open the door to legal bunfights” as well as to patients being exploited by “charlatans”.

If the implications for patients are unclear, what about for insurers?

This month, the Department of Health stated that the NHS has “potential liabilities” of £26.1bn, of which £25.7bn relates to clinical negligence. This is an increase of £3.1bn in a year. There are no aggregate figures for the independent sector.

The Bill is unlikely to have an impact on the bulk of claims covered by insurers of private hospitals and doctors. The bulk of claims relate to errors made by doctors, not claims where  a doctor has departed from standard practices. However, the Bill may be good news for some insurers as it provides a set of rules for medical practitioners to follow. The practitioner will have the protection of the law, provided he/she:

  • acts responsibly in departing from the existing range of accepted treatments
  • consults with an appropriately qualified colleague
  • obtains informed consent to the proposed treatment
  • considers the risks and benefits of taking the proposed steps
  • ensures that the decision is made in a way which is accountable and transparent

The Bill also prohibits a doctor from carrying out treatment for the purpose only of research, or any purpose other than the best interests of the patient.

Insurers of specialist practitioners or clinics may therefore welcome the Bill. Their insureds, by the nature of the work they do, are at the forefront of research and innovation. They will receive greater protection under the law if the Bill is passed than they do now.

The members of the medical profession who have criticised the Bill may have missed a key point. The rise in consumer choice, globalisation, health-tourism and internet surfing means that patients are ever more informed, demanding and confident in discussing their conditions with doctors. Patients have access to research papers and, understandably, may well read up on the subject and then push their doctors to go further and further in exploring innovative treatments. Doctors are going to come under increasing pressure to try alternative approaches. In that context, a change to the law that recognises this pressure on doctors, and provides them with legal protection, could be good news for their insurers.

The risk of a second opinion from the judiciary

An unintended consequence of the Bill could be that it encourages some groups of doctors, representing the extremes of opinion, to forge ahead with new treatments at the expense of patients. This could lead to litigation in the courts as patients’ families and doctors’ insurers do battle over the meaning of the Bill.

The draft legislation is only two pages long. The first judgment addressing the new law would run to many more pages. If the Bill is passed, it could take expensive litigation before insurers fully appreciate its effect on the health of the insurance industry.