Post-LASPO ATE Premiums in Clinical Negligence Claim

In recent months there has been much debate about the extent of recoverability of post-LASPO ATE premiums in clinical negligence claims, with all parties vigourously putting forward their opinions either way. As such, this area has become the latest “hot topic” of debate.

However some helpful guidance has now been provided by Master Leonard, sitting as a judge of the Mayor’s and City County Court, which may assist all parties in their respective approaches going forward.Delivering his judgement in the matter of Emily Nokes v Heart of England Foundation NHS Trust [2015] EWHC B6 (Costs), Master Leonard found that “suspicion and speculation” are not enough for a court to reduce such a premium.

The insurance policy, issued post-LASPO by Temple Litigation Advantage, involved a premium which was potentially recoverable as the same was divided into 2 parts; the first part provided cover for to the insured against the risk of their liability to pay for expert reports and required a premium of £5680.00 for £10,000.00 indemnity and the second part provided an indemnity of up to £100,000.00 for a premium of 3% of damages to insure against any liability for opponent’s costs and other disbursements.

Whilst the Claimant argued that the policy was clearly a single policy, with the premium being divided into 2 parts, and only (and properly) sought recovery of the first part of the premium, the Defendant argued that the use of the word “premiums” denoted that there were “…two separate premiums…” and that the first of these, insuring against the cost of expert reports, did not comply with Section 58C of the Courts and Legal Services Act 1990 (as amended). The Defendant further argued that the first part of the premium could be regarded as being “self-insured”. The Claimant argued to the contrary, maintaining the position that, irrespective of the use of the word “premiums” in one of the headings, the policy involved only one premium, divided into “…two components, one of which was recoverable and the other not.”.

Master Leonard noted that he was not convinced by the Defendant’s argument that there was only one premium and rejected the Defendant’s argument as “…inappropriate…simply because there may be some ambiguity or imprecision in its wording…”, noting further that he did not consider “…that much really turns on whether one describes the policy as incorporating one premium in two parts or two premiums” and the policy was “compliant with the statutory provisions either way, because it provides the information that the statutory provisions require”.”In my view the question is whether, on a proper reading by reference to established contractual principles of interpretation, the policy does or does not comply with the statutory requirements.”

Finding that the first part of the premium was recoverable in principle, Master Leonard found that:

“On a proper construction the Claimant’s ATE policy complies with statute and the part of the Claimant’s ATE premium that relates to experts’ reports on liability and causation is, in consequence, recoverable in accordance with statute….

The Defendant is concerned that the recoverable ATE premium offered by Temple is not subject to real market competition and that ATE insurers are under commercial pressure to maximise recoverable premiums and minimise irrecoverable premiums.

I need more than suspicion or speculation to reduce an ATE premium. In implementing the 2013 reforms Parliament intended that that certain kinds of ATE premium should continue to be recoverable under orders for costs. For that intention to be achieved insurers must be able to offer a compliant product which is realistic and competitive. On the evidence Temple has come up with a compliant, competitive product which the Claimant has accepted.”

The Defendant, as a secondary challenge also raised arguments in respect of the amount of the premium, submitting comparable evidence in support of their contentions.

However, and again, Master Leonard rejected the Defendant’s approach, observing that in considering the amount of the premium:

“It is for the Defendant to establish some case to the effect that the Claimant’s ATE premium is unreasonable in amount. In that event, the Claimant would have to address the point. On a standard basis assessment, any doubt would be resolved in the Defendant’s favour.”

“CPR 44.4 requires that on considering both reasonableness and proportionality I have regard to all the circumstances.”

“For that reason, even if the Defendant had not relied upon comparable market evidence to support the proposition that Temple’s ATE premium is not reasonable in amount, I would be unable to accept the Defendant’s contention that the Claimant cannot rely upon comparable market evidence to support the proposition that in fact it is.”

“It is not suggested, nor should it be, that it was unreasonable for the Claimant to arrange ATE cover at all. The reasonableness of the Claimant’s choice of ATE cover must be measured by reference to what is available to her.”

and further found that the comparable evidence did not

“…offer any indication that the amount of premium incurred and claimed by the Claimant is unreasonable”.

adding that

“The Defendant points out that reduction on assessment is part of the ATE insurer’s ‘model’. It does not follow that I can reduce the recoverable ATE premium, as suggested, by in the region of 95% without affecting the viability of the insurer’s product. I do not find that credible.”

Master Leonard accordingly found that the first part of the premium was recoverable in full.

It is very much hoped that this ruling will assist all parties in resolving the contentious issue of these post-LASPO policy premiums, although such will of course remain to be seen.

A full copy of the judgement may be found here.