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Personal injury discount rate cut may be 'legally flawed'

Medical indemnity experts call on Lord Chancellor to delay the implementation of the change

Mark Gould

Monday, 13 March 2017

Medical indemnity experts have written to the Lord Chancellor, Liz Truss, expressing concern that her decision to cut the discount rate applied to personal injury claims may be "legally flawed".

Last month, the Lord Chancellor cut the discount rate from 2.5% to -0.75%. Doctors' indemnity organisations immediately expressed concern that the move will increase the size of compensation payments leading to significant new costs for the NHS and a dramatic increase in the cost of indemnifying its members.

Indemnity organisations said that lowering of the discount rate - a mechanism used by the courts to adjust large compensation payments to take account of future investment returns - will increase the cost of compensation awards immediately for known claims. It will also increase the cost of claims arising from incidents in the future. And it will apply retrospectively to claims for negligent incidents that have already happened, where a claim has not yet been made but will be at some future date.

Chris Kenny, chief executive of the Medical and Dental Defence Union of Scotland (MDDUS), has now written to the Lord Chancellor asking her to justify the cut.

"As the UK's second-largest provider of indemnity for GPs, the Chancellor’s confirmation of the £6 billion cost of the discount rate change increases our concern for our medical and dental members. It makes no sense to proceed with a decision on this scale when Government itself has clearly indicated that the system needs to change – and change urgently.

“For that reason, honouring our pledge to explore all necessary action to protect our members, we have written to the Lord Chancellor. Advice from Leading Counsel indicates that her decision may be legally flawed, both in its process and its reasoning.

“We are therefore seeking as a matter of urgency the disclosure of a number of documents to enable this to be explored further and are urging her to stay implementation of the rate change until the further work promised by the Chancellor of the Exchequer and the Department of Health has concluded," he said.

“We believe that this is a constructive approach to lessen current uncertainty. We do, of course, reserve the right to take any necessary further action if we conclude that is necessary having studied the Lord Chancellor's response."

The MDDUS said it is also writing to the Cabinet Secretaries for Health and Justice, urging the Scottish Government to avoid precipitate action to introduce changes in Scotland in the face of the legal uncertainties of the Lord Chancellor’s decision and the absence of a full review of the overall impact of any change.

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