In this, the second article in our series we focus on the recommendation of the inquiry regarding indemnity products for healthcare professionals which healthcare indemnifiers and insurers may wish to consider.
Duties of healthcare professionals
Individual healthcare professionals are required by their professional regulatory bodies to ensure that where necessary they have appropriate indemnity/insurance arrangements in place to ensure that patients who suffer as a result of negligent treatment are properly compensated. The indemnity is provided by either the Medical Defence Organisations (MDOs), trade unions (eg Royal College of Nursing) CNST/CNSGP or specialist insurers.
In addition to cover for civil claims healthcare professionals should also take out cover to meet the cost of representation in relation to regulatory proceedings, disciplinary proceedings by their employers, for provision of legal help at inquests, and, in certain circumstances, assistance in criminal proceedings.
The difference between the indemnity schemes and an insurance product is that indemnity is generally offered on a discretionary basis to its members, whereas the cover provided by an insurer is by way of a regulated insurance product. Indemnifiers are not regulated by the Financial Conduct Authority (FCA) and this was raised as a concern before the Inquiry. The specifics of the concern however are not clear from the report.
Duties of healthcare organisations
The CQC requires regulated healthcare providers to have insurance or indemnity cover in place in cover potential liabilities arising from death or injury, as well as other financial risks (see Regulation 13 Care Quality (Registration) Regulations 2009).
A healthcare provider’s responsibility for its employed staff acting within the terms of their contracts is not usually contentious. However in the private sector staff are often not employees, but retained on contracts for services. The healthcare provider’s liability for their actions can, and often does, generate a raft of legal arguments between those with competing interests before the substantive issues are even considered.
Falling through the cracks -the indemnity gap
The Paterson case highlighted the issue of a healthcare provider’s potential civil liability not only for the actions of a person who was not an employee, but also for a healthcare professional’s criminal activities, and the gap that may then open up in relation to indemnity/cover.
Paterson was a member of the MDU who provided him with discretionary indemnity. That cover was then withdrawn as the liability to injured patients stemmed from his criminal activities.
Following his criminal conviction in 2017 around 750 of his former private patients brought compensation claims. The proceedings were directed against Paterson himself, his employers, The Heart of England Foundation NHS Trust in relation to his NHS treatment, and Spire Hospitals, where Paterson operated on a private basis. Liability was not disputed by Paterson but denied by both the Trust and Spire.
The issue was essentially who should foot the bill for compensation payments arising from criminal activities of a contractor for services?
Shortly before the civil trial was to begin however, the Trust and Spire established a fund of around £37m to compensate his victims. Some £27.2m was paid by Spire.
It is highly likely however, that any insurer would have responded in a similar fashion to that of Paterson’s indemnifier, and declined cover in relation to the criminal activities of a healthcare professional.
There are likely however to be other circumstances where gaps in cover may emerge. Cover, discretionary or pursuant to an insurance product may be declined for a variety of reasons eg failure to disclose the full extent of the scope of practise or delay in notifying a circumstance. Often when a healthcare professional retires indemnity arrangements cease. We at BLM have assisted several practitioners who had insurance cover on a claims made basis finding that they were without cover for a claim which only became known to them years after the event, and following their retirement. The impact on those individuals and the claimants seeking compensation can be severe.
Medical practice is changing rapidly and innovations in practise are happening almost on a daily basis it seems. Whatever form of cover is taken by healthcare practitioners or organisations it needs to be fit for purpose and be sufficiently flexible to accommodate changes in practise and avert gaps in cover.
The Inquiry’s recommendation
In the light of the clear potential for patients injured as a result of the negligent or criminal actions of medical professionals to go uncompensated the Inquiry recommended that the Government should, as a matter of urgency reform the regulation of indemnity products for healthcare professionals and introduce a nationwide safety net.
In our response to the Government consultation on healthcare indemnity last year we in fact suggested the establishment of a fund contributed to by indemnifiers and insurers as a form of levy to ensure that patients receive the appropriate compensation. Such a scheme would not only ensure that injured patients are compensated but that the process of securing compensation is quicker, avoiding the need to engage in forensic reviews of the actions of those around the unindemnified healthcare professional before compensation can be paid.
How much any levy would be, and whether any fund would seek to recover compensation payments from others following inquiry into the full circumstances surrounding an incident are questions for the future. It would however seem to represent a reasonable solution to what is, hopefully a limited occurrence.
The exact nature of the concern expressed to the Inquiry regarding FCA Regulation of indemnity/insurance provision in the private sector is not apparent. However as it was voiced by several giving evidence to the inquiry and forms part of its recommendation one might expect the issue to be given very close consideration.
The overall objective of any changes to the current indemnity/insurance arrangements is however clear; to ensure that no patient avoidably injured as a result of medical interventions fails to receive appropriate compensation quickly.
The trick will be to achieve this while balancing the needs and requirements of individual healthcare professionals and providers while ensuring that when things do go wrong there is full and appropriate enquiry into the circumstance to ensure that lessons are learned and practice amended.