Recent changes to the rules relating to the payment of NHS charges mean that all insurers should review their reserves in cases where the third party has to attend hospital as a result of an accident. The new provisions, which stem from the Health and Social Care (Community Health and Standards) Act 2003, apply to all relevant incidents occurring on or after 29 January 2007.

Under the old scheme, only motor insurers had to repay the NHS trust the money which had been expended on an innocent party’s attendance at hospital. These rules have now been extended to cover all compensators in cases involving motor claims; employers’ liability, public liability, product liability disputes; and disease cases where the disease in question is directly attributable to the injury suffered by the third party. Among those now caught by the new rules will be defendants who pay compensation personally or within their deductible excess.

As before, charges must be paid within 14 days of making a compensation payment or within 14 days of the date that the certificate is issued if the certificate is issued after the settlement date. It is also possible to apply for a waiver of payment of the charges prior to any appeal on the grounds of excessive hardship.

Impact on defendants

The changes may well lead to a significant increase in the reserves that have to be held by non-motor insurers and self-insured motor defendants. Traditionally, such compensators have escaped liability for payment of such charges. Recoupment of charges now also includes the cost of any hospital transport used. This has to be repaid direct to the NHS Ambulance Trust. There is to be a standard ambulance charge of £159 per journey. This charge will be applied to all ambulance journeys, including those to (and between) hospitals.

Good news for defendants

Repayment of the NHS charges may be reduced as a result of a third party’s contributory negligence. However, proof of an agreement on liability between the parties may have to be supplied to the Compensation Recovery Unit for it to consider whether any reduction in the NHS charges should mirror that agreement. Previously, in motor claims, a defendant was still held responsible for the full repayment of the NHS charges incurred, even where the claimant had been found to be 99% responsible for the accident itself. That has now changed.

Tactically, defendants can still make global offers to a claimant by making no reference to a split on liability. However, in more serious cases, it would be prudent to consider making a definite agreement on liability with the claimant. This could have a significant impact on the NHS charges payable.

The future

The level of NHS charges has grown steadily over the years. Back in 1997, a motor insurer would only be charged for approximately the first week of an innocent third party’s stay in hospital. Charges were capped at £3,000. In April 2006, that cap had risen to £37,100, based on the first two months’ stay. To help compensators get to grips with the new provisions, it has been decided to freeze the cap from April 2007. The limit will then be reviewed next year. However, the current trend is for the NHS to try and recoup an everincreasing amount of the costs of healthcare.

What should defendants do?

Defendants need to reassess the relevant reserves and ensure that NHS charges are factored in when the third party has received NHS healthcare as a result of the accident. This will be particularly relevant when dealing with serious non-motor cases where a third party has had a lengthy stay in hospital. Global offers (by which a defendant may deliberately avoid making separate offers on quantum and liability) are still a useful negotiating tool for defendants.

However, defendants need to consider negotiating a firm agreement about contributory negligence in cases where NHS charges are significant. Such an agreement could have a major impact on the charges payable.

Defendants will still be able to seek a review of – or to appeal against – the charges. Usually, the review or appeal focuses on arguments about contributory negligence and often involves cases where the claimant has been treated for some pre-existing or accelerated condition.