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Appeal Court rules in favour of ATE insurance from the inception of a claim

In another landmark ruling this year, the Court of Appeal has re-asserted that ‘block-rated’ ATE insurance premiums are recoverable in clinical negligence claims, even when the claim is settled before proceedings are issued or experts have been commissioned.

Lord Justice Lewison dismissed the appeal of Peterborough & Stamford NHS trust v McMenemy and upheld the appeal of Reynolds v NUHF Trust in a joint hearing on the subject.

Whilst he openly acknowledged the increase in litigation costs within the NHS, he gave overriding recognition to the necessity for claimants to mitigate risk to themselves at the outset of litigation. The trusts however had argued that the claimants were not exposed to such risk and consequently the inception of an ATE policy at the initial stage of the claim was not proportionate.

Summarising, Lord Justice Lewison said: ‘I have not been persuaded that we should depart from the policy decision taken in Callery v Gray and examine the reasonableness of taking out ATE insurance on a case by case basis. Nor am I persuaded that the new proportionality test requires a case by case approach. It is clear from the Government’s formal response to Sir Rupert Jackson’s recommendations that “for reasons of public policy” the Government decided to exclude ATE insurance premiums relating to the cost of expert reports in clinical negligence cases from the general abolition of their recovery. The concern was that claimants might not be able to afford the “upfront” costs of such reports, and thus that access to justice might be unduly restricted.

Qualified One-way Costs Shifting (QOCS) does not protect the unsuccessful claimant from the potentially substantial costs of disbursements associated with negligence claims and, without ATE insurance, law firms are reluctant to fund disbursements which place them and their client at unreasonable risk of loss.

Citing Rogers v Merthyr Tydfil, Lewison, LJ continued to say: The case law has also emphasised that costs judges do not have the expertise to second guess the insurance market, still less to deconstruct a policy that is offered as a package into its constituent parts.’

Commenting on the judgment, David Pipkin – Underwriting Director of Temple Legal Protection said: ‘Lord Justice Lewison’s asservation of ATE insurance from the outset of a clinical negligence claim has brought some peace of mind to claimants and greater confidence for litigators enabling them to provide genuine and protected access to justice, a welcome judgment indeed. It was critical that the Appeal Court recognised that the risk of a claimant being liable for the cost of expert reports materialises immediately on instruction of a lawyer, particularly when considering that such reports may not support the claim.’

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