In a judgment handed down in late January of this year in Chester County Court, it was held that a technical challenge to the recoverability of ATE premiums by the NHS Litigation Authority (NHSLA) was unsuccessful. This is not the first time that such a challenge has failed and premium has been held to be recoverable by the Claimant in full.
In Axelrod v University Hospitals of Leicester NHS Trust1, the Claimant, Daniel Axelrod, appealed against a decision at a costs assessment to disallow the recovery of his ATE premium in the value of £5,088. Following the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, one of the few types of ATE premiums that is still recoverable from unsuccessful opponents is a premium charged to cover the risk that the claimant will be liable to pay for an expert report on liability or causation, provided that certain conditions are met.
Mr Axelrod had undergone surgery at the defendant’s hospital, following a fracture in his leg suffered while playing football, during which screws were used to stabilise the fracture. The defendant accepted that one of these screws was too long and caused cartilage damage. In pursuit of damages from the defendant for losses caused by negligence, Mr Axelrod purchased an ATE insurance policy, and the claim was subsequently settled when he accepted a Part 36 offer of £3,000.
However, following provisional assessment that the ATE premium was recoverable by the claimant from the NHSLA, this was challenged by the defendant under the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No2) Regulations 2013 (the Regulations), and on the ground that the premium was disproportionate. Specifically, the defendant argued that the ATE policy failed to state the amount of the recoverable premium in that it did not state what part of the overall premium related to liability to pay for experts’ reports, and so did not comply with the statutory regime for recovery. It also argued that the policy did not “on its face charge a recoverable premium” because it was not obvious whether or not the sum was a proper premium to charge for the risk of incurring a liability to pay for experts’ reports. The defendant submitted that the Court should exercise its discretion to disallow it.
The Judge held that the claimant “is not limited to recovering the insurance premium only where the policy states the amount of the premium that relates to the risk of incurring liability for expert reports on the issues of liability and causation” because he did not interpret the Act and its associated Statutory Instruments as requiring such a statement. He therefore allowed the claimant’s appeal, with the ATE premium being recoverable in full. On the question of whether the premium was obviously recoverable the Judge stated that while it was unfortunate that the reasonableness of a premium was often difficult to assess, this did not undermine the fact that this was the premium being charged. Its recovery would be subject to the usual rules of costs assessment as to proportionality and reasonableness.
Cases such as this one highlight ongoing concerns that the NHSLA tend to challenge all costs at the conclusion of successful cases. While this judgment does not advocate an excessively strict construction of the legal requirements as to the policy terms, and the Government continues to be lobbied about the wider public policy concern that running such costs disputes is rarely a sensible use of public funds or Court time, ATE insurers of medical negligence claims would be well advised to review policy wordings in order to pre-empt the types of arguments that were raised here.