Using recovered costs to help victims recover
recovery of NHS costs in personal injury cases
the TUC’s response to The recovery of National Heath Service costs in cases involving personal injury compensation: a Department of Health consultation
The TUC welcomes and strongly supports the Department of Health’s proposal to recover treatment and other costs from personal injury cases - we have been arguing for such a move for some time. When the consultation was issued, TUC Deputy General Secretary Brendan Barber said:
'We welcome this contribution to the debate about how Britain pays the price of workplace injury and illness. We need to balance the contributions of victims, employers and taxpayers. Making the perpetrator pay would increase the incentive for prevention.'
We believe that the true costs of workplace injuries and illness are currently hidden and paid for mostly by the state and even more by the individual victims, and we believe that ‘making the perpetrator pay’ is not only morally just, but would also create a more effective incentive for prevention. Employers regularly complain that they are asked to pay for things which are not under their control - this measure would directly relate employers’ actions with their costs.
This single step is only part of the picture, and will add only partially to the extent of the ‘perpetrator pays’ system in workplace injury and illness, but it is a step in the right direction and could well have a substantial effect, because it will impact on the cultural perception among employers (no doubt unconscious) that if they injure their workers the NHS will pay for the treatment.
Our experience of the operation of the Compensation Recovery Unit, although we do not necessarily agree with all of the rules it operates, shows that such a system of recovery, based on unit costs rather than actuals, can work very effectively.
However, we disagree with the proposal that the money generated by this move, estimated at about £120 million a year, should be devoted to general NHS expenditure. We believe that the amounts related to employer liability insurance claims (about £30-£40 million) should be used to start to develop the comprehensive national occupational health and rehabilitation service that was first called for in the Beveridge report. Further amounts could be added on rehabilitation from the non-work-caused injuries and illnesses (because whatever the cause of the injury or illness, return to work is hampered where rehabilitation is not on offer or not effective enough).
In this way, we could create a virtuous circle out of the compensation system, using money raised from employers through the insurance system to extend the ability of the NHS to return people injured or made ill by their work to health and to employment, and therefore cut industry and the nation’s costs while benefiting the victims as well.
Note
This response comes from the TUC, which represents people at work in Great Britain. It has been developed in consultation with the legal and health and safety officers of the 69 unions affiliated to the TUC which among them have over 6.7 million members. Unions have been a driving force in prevention, rehabilitation and compensation, and our experience of over 50,000 workplace personal injury legal cases a year underpins this response.
The TUC believes that there are excellent reasons why this proposal is good morally and economically. If we can release the costs of treating those injured or made ill at work by making the perpetrator pay, we can enhance occupational health and rehabilitation services so that fewer people are injured, fewer people are made ill, and those who are return swiftly to health and employment. This will make a major contribution to the Government/HSC strategy Revitalising health and safety.
Making the perpetrator pay: the impact on employers
At the moment, if someone is injured or made ill by their work, the costs are shared between employer, government and the victim. Employers meet the costs of lost production, compensation, sick pay and so on. The Government pays for the health costs, benefits, lost income tax and the victim and their family suffer pain and suffering, continuing disability, lost wages (only partly compensated for by benefits and legal compensation) and loss of quality of life.
Research by the HSE shows that the costs are currently disproportionately borne by the victim, and that employers are the main beneficiaries. And yet in the sort of cases which this consultation document deals with, the employer is the perpetrator of the harm. As well as being unfair (especially on the victim) this means that the financial incentive on the employer to prevent injuries and illness is less than it would be if they had to meet the full costs of their actions.
Other research for the HSE suggests that for the costs of injury and illness to become an effective incentive on employers, the costs of compensation would need to increase three or four-fold. So adding to the costs of occupational injury and illness will go some way towards creating this incentive. We already know that employers consider that the possibility of being sued is a major incentive to develop occupational health services (in recent research for the HSE it came second only to the fact that provision was the right thing to do!)
Making the perpetrator pay: the effect on insurance
The proposals, if implemented, will increase employers liability insurance premium costs, but we consider that the insurance industry should be relating premiums to risk, loading premiums where there is a history of poor performance in health and safety and poor risk management, and reducing premiums where there is a good history of health and safety measures.
These proposals may therefore have the effect of encouraging insurers to be more proactive than they are already in encouraging their policy holders to prevent workplace injury and illness. The TUC hopes that insurance companies will use this new recoverable cost to further develop systems of premium weighting for those who do well and against those who manage risks badly.
Using recovery to aid recovery
We would like to see the money recovered by the NHS injected into preventive occupational health services. The costs of work-related injury and illness to the NHS and the wider economy are immense and many of these accidents and diseases are preventable, through good occupational health and safety management and access to competent advice. Occupational health services can give this competent advice and assist in prevention and early recognition of work-related ill-health. They can also assist in the effective rehabilitation of workers off sick due to an injury or illness.
At present, the coverage of occupational health services in Great Britain is patchy, with fewer than one in three workers - under seven million - being covered by their employer (down from 50% in the last decade). Only 34% of small firms and just 13% of micro-businesses provide any form of occupational health service. We would like to see more money for NHS Plus, which currently needs to charge for all of its services and therefore does not adequately reach the small firms sector. In addition, primary care groups need to place more emphasis on occupational health and have someone with occupational health expertise in each PCG (where possible based on the model of the Sheffield Occupational Health Project). The construction industry has recognised the need for a sector-wide occupational health service, but progress is currently stalled by uncertainty about how it could be funded. It might even be possible to divide up the costs recovered to sustain initiatives in the industries with the worst records.
We believe that rehabilitation in particular needs further attention, and we welcome the relevant sections of the Government’s green paper Pathways to work: helping people into employment. The proposals set out on rehabilitation through healthcare and the proposals in this consultation document should be brought together so that people are more able to return to work.
Bringing the two elements together
Employers are growing increasingly vocal in objecting to paying for things they say they are not responsible for. In the case of work-related injuries and illness, there is simply no case to argue, but there is the potential to return the money spent by business on compensation recovery, in the form of better occupational health services and improved access to better rehabilitation services. We hope that business is encouraged to take a positive rather than negative approach to this issue.
Q1. Do consultees agree that restricting recovery to hospital and ambulance costs provides sufficient restitution to the NHS whilst retaining simplicity of administration and therefore reduced costs of recovery?
The TUC would ideally like to see recovery of all NHS costs such as physiotherapy, GP and treatment costs where these have been incurred because of the fault of another party to ensure defendants meet the full costs of their actions. In work related accident/illness cases this would act as a greater incentive for employers to improve health and safety at work, investing more in accident prevention. Further these significant funds could then be returned directly to the trusts involved so that they can improve the service they give.
However we accept that recovery of all costs, especially those incurred from primary care treatment, would be more difficult to achieve than hospital and ambulance costs, not least because of difficulties of identification. Such recovery must represents a fair reflection of the actual costs incurred. Account must be taken of the fact that all injuries/illnesses should now be covered and that different types of cases may cost the NHS more. Consequently if the charges under the Road Traffic (NHS Charges) Act 1999 are to be used as a template we believe these need to be further revised/increased, quite aside from the planned inflation-based increases due to be introduced in 2003.
Q2. Do consultees consider that recovery of costs should include cases involving industrial illness?
Yes. We believe that excluding cases of illness such as asbestos, asthma and dermatitis cannot be justified. One quarter of all personal injury claims are work related, and within this category of cases more arise out of illness than injury. Although the actual benefits to the NHS from this recovery could in certain circumstances be less (because of the exclusion of primary care costs - the nature of the treatment given to those who suffer such illnesses is that it is less hospital-based than injuries), revenue will inevitably come from these cases. Further, and more importantly employers who cause illness through a lack of health and safety at work should not escape this liability which will reinforce the need for them to reduce risks at the workplace.
Common work-related illnesses such as chronic back injuries, asthma, dermatitis, vibration white finger and asbestos-related diseases have massive cost implications for the NHS. However, we accept that there may be practical difficulties, and, should it prove impossible to overcome these in time, we would prefer a system of cost recovery for injuries to be proceeded with, and further research and investigation to allow occupational diseases to be added in due course - however, we do not think this has to be necessary.
Q3. Do consultees agree that the costs and practicalities outweigh the principle that the negligent party should have to pay costs in proportion to their liability;
· in all cases
· only in cases where there has been a finding of contributory negligence by a court.
If so do you think there is a risk that this option could encourage people to pursue cases solely for a finding of negligence?
Yes. Where this liability applies costs should be paid in full by the defendant(s) in all cases. If responsibility for causing the accident is borne by more than one defendant then the cost could be split fairly easily between them based on the proportion of the damages they paid. However to reduce the overall cost for contributory negligence would in our view be completely unworkable. The vast majority of claims are settled out of court where no clear cut decision is reached between the parties on this issue. Although this may be seen as 'rough justice' by some defendants/insurers we believe it leads to the fairest results for all concerned. In addition defendants benefit in other ways - many valid claims are not pursued and defendants under this proposed scheme may be excluded from paying costs for primary care.
To treat those claims that are decided by the court differently would only complicate matters further, create a feeling of greater unfairness and encourage late court settlement of claims.
Q4. Do consultees agree that all payments of compensation should attract the potential for repayment of NHS costs regardless of the nature or size of the parties involved? If not should this be for insured cases only?
Yes. Where injury/illness has been caused by a party they should become liable to pay these costs. This will encourage all defendants to take their responsibilities seriously and to make adequate provision should things go wrong. There should be no exclusion of small firms, where accident rates are higher than in large firms. But if small firms knew that the money was going into occupational health and rehabilitation services which they are least likely currently to be able to access, they may be more willing to accept the proposals.
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