As regular readers will recall, the Health and Social Care Act (HSCA) 2012 received Royal Assent on 27 March 2012. Many of its key reforms take effect on 1 April 2013.

The HSCA has attracted strong opposition from the medical profession. Richard Horton, editor of The Lancet, warned in March 2012 that "people will die" and of “unprecedented chaos” as a result of the reforms the HSCA introduces.

Lawyers too have good reason to be cautious. If there are gaps in the indemnity arrangements put in place by the new “providers” of NHS-funded services what does this mean for both claimants and defendants?

According to the guide issued by the Department of Health (DOH) the HSCA “establishes a comprehensive, proportionate and robust legal framework for sector regulation to protect patients’ interests”. NHS services will continue to be delivered by a “mixed economy of public, independent and voluntary sector providers” and a joint licensing regime, applicable to “all providers of NHS services”, comes into effect from April 2013.

What was not clear in March 2012 and is still not clear now is how it is proposed to ensure that these new “providers” have and in keep in place adequate insurance for the care which they provide to NHS patients? What is to happen if a new “provider” is under-insured or goes out of business as some clinics threatened to do in response to the claims made in relation to PIP breast implants? If there are gaps in the indemnity arrangements for NHS-funded services, claimants may face difficulties in obtaining compensation for substandard care and defendants will be operating with uncertainty over who is liable for what under the proposed new regime. As any lawyer knows, problems arise when responsibilities become blurred.

The death of Clare Secker illustrates the problems that can arise. Ms. Secker became ill in December 2008 and her family sought help from the local out-of-hours (OOH) provider. A nurse employed by the OOH provider gave instructions by telephone to give Ms. Secker paracetamol rather than involving a GP. Ms. Secker subsequently died of broncho-pneumonia. Her death was entirely avoidable had she been prescribed a simple course of antibiotics.

The nurse subsequently accepted responsibility for the incorrect instructions but declined to compensate Ms. Secker’s family unless the OOH provider by whom she was employed reimbursed her for the damages paid out. The OOH provider refused to do so claiming that its insurance policy specifically excluded responsibility for negligence by nurses. The local primary care trust (PCT) which commissioned the OOH provider stated that it required all its “providers” to hold insurance and that Ms. Secker’s claim was accordingly nothing to do with the PCT.

It is estimated that 37 private healthcare companies bid for almost 400 NHS service contracts worth £262m in 2012. What is alarming is that an analysis by The Guardian in December 2012 of six of the biggest companies with a particular emphasis on patient care revealed that none of them could be treated as a going concern without the financial support of its respective parent company. Only one of the six had reported a trading profit in its most recent accounts. The financial position of all six companies, all of them new “providers” under the HSCA, was, at best, weak. 

For lawyers faced with increasingly shrill demands to reduce both time and costs and, from 1 April 2013, to provide the court with a detailed costs budget at the outset, any additional delay and expense in establishing who is responsible when things go wrong and whether adequate indemnity or insurance arrangements are in place to meet any resulting claim will be particularly unwelcome. The advice to lawyers for both claimants and defendants struggling to get to grips with the reforms introduced by the HSCA after 1 April 2013 must be to “mind the gap”.