How compensation is calculated in a Medical Negligence claim
If you have suffered from an injury as a result of Medical Negligence, an award of financial compensation is not always the main reason for bringing a claim. The financial compensation awarded by the court is designed to put you back into the same financial position that you would have been in if the injuries had not been sustained.
In this article, we explore how your compensation is calculated and what, if any, deductions will be made by your solicitor.
Compensation, otherwise known as ‘Damages’ can be broadly split into two categories:
General Damages in a compensation claim
This award is designed to compensate you for the pain, suffering and loss of amenity caused by the injury.
Generally, the more severe the injury, the higher the award given.
Damages for brain injuries or injuries resulting in paralysis can run into hundreds of thousands of pounds, whereas less severe injuries, or injuries which are not permanent, might only attract a few thousand pounds.
Special Damages in a compensation claim
Special Damages are the financial losses or expenses you have incurred as a result of your injury. These are split into two categories; past losses and future losses.
Past losses are calculated up to the date of the trial or settlement. These loss calculations can often be highly complex and require detailed analysis.
Examples of financial losses include:
• Loss of earnings as a result of not being able to work because of your injury
• Travel expenses to hospital for treatment you otherwise wouldn’t have needed
• Care and assistance-for any care or assistance (even if provided by a family member),
• Treatment costs- the cost of any treatment, or equipment you have had to buy.
Future losses are an estimate of what the cost of your future needs arising from your injury will be. These may include lost earnings if you are unable to return to your job; accommodation if your injuries are so severe that you cannot negotiate stairs, transfer or wash independently; equipment and transport needs, therapies and continuing care and assistance. This is not an exhaustive list.
To ensure you are properly compensated requires careful consideration of your needs going forward.
Will I receive all of my Damages? Or will there be deductions?
This will depend upon the arrangement you have with your solicitor for funding your case. OM&M will offer a Conditional Fee Agreement (CFA), which is essentially a “no win no fee” arrangement. Read your agreement very carefully and don’t be afraid to ask your solicitor questions about how much they will deduct from your compensation at the conclusion of your case.
What will be deducted?
Some of the state benefits you may have received for your injuries
The Compensation Recovery Unit (CRU) is part of the Department for Work and Pensions (DWP).
The CRU is notified of the details of your claim if your claim is successful.
If you received welfare benefits because of your injury, you may be required to repay some of these benefits from the compensation you receive. This repayment is calculated by the DWP which will issue a certificate detailing the amount to be repaid from your compensation. The compensator will deduct it from your compensation before sending your solicitor the balance.
After the Event Insurance
You will be liable to pay part of an after the event insurance premium. but only if you recover compensation.
Your CFA will be insured. If your case is lost or abandoned your solicitor and barrister will not be paid (no win, no fee) but any court fees and experts’ fees must be paid. These could run into thousands of pounds, which is why it is important that insurance is in place. The insurance will cover these fees if you lose or abandon your case, with no premium to pay.
As with any insurance, premiums vary, but the after the event insurance OM&M currently use charge premiums ranging from £3,498 to £7,558, depending on the value of the claim and how soon it is concluded. A large part of that premium has to be paid by your opponent if your case is successful, but the balance (ranging between £499 to £2,459 maximum, depending upon the size of your claim) will be deducted from your compensation.
This is calculated by assessing the complexity of your case and applying a percentage to reflect the risk in taking your case on; 100% being the highest risk.
To calculate their success fee your solicitor will add together what you have been awarded for General Damages and past losses. Your solicitor may charge up to 25% of that figure as a success fee and deduct it from your compensation.
At the conclusion of your case your solicitor will prepare a bill for your opponent to pay.
Your opponent can and will contest your solicitor’s bill.
Usually a settlement will be reached, but inevitably, there will be a shortfall in your solicitor’s billed costs. Your solicitor may recover that balance from your compensation as part of your funding agreement with them. You can contest the amount, but if you have agreed to cover that shortfall in your agreement with your solicitor, it could be difficult and may have to be resolved by the court.
Your case settles for £250,000.
In this example £150,000 of this is to compensate for future losses. £100,000 is to compensate for past losses and General Damages.
Your case has been funded with an insured CFA. The part of the after the event insurance premium payable by you is £2,459, because your case is successful and you have recovered £250,000 compensation.
Let’s say you have received £7,500 recoverable welfare benefits since your injury. Your solicitors bill is £100,000 and the CFA you entered into has a Success Fee of 100%. How much of the £250,000 will you get?
Deduct CRU benefits
Your opponent must deduct the amount owed to the DWP for the benefits you have received form your £250,000 award, in this example it is £7,500. Your opponent’s solicitors will pay this directly to the DWP and send your solicitor the balance of your compensation, £242,500.
Deduct part of the after the event insurance premium
Your solicitor must deduct £2,459 for your contribution to the After the Event Insurance premium leaving £240,041.
Deduct the success fee
Then your solicitors may deduct a success fee. In this example General Damages plus past losses amounted to £100,000. You signed an agreement for a 100% success fee. Therefore, the success fee is £25,000 (25% of £100,000) which is deducted from your compensation leaving you with £215,041.
Deduct shortfall in solicitors bill of costs
Assuming in this example that your solicitor will recover around 75% of their bill from your opponent (sometimes they may recover more and sometimes, less). Your agreement with your solicitor will set out which parts of the shortfall in recovered costs are payable by you. The shortfall iIn this example is theirthe solicitor’s unrecovered costs which isare £25,000 (25% of their costs bill) which, when deducted from your compensation would leave £190,041 for you.
This is an extreme example as the success fee may be far less than 100% and you may not be charged for the full shortfall of costs. However, OM&M does not charge any success fee, nor do we seek to recover any shortfall in our costs from your damages.
What difference would it make if you instructed OM&M?
You would receive £240,041 in the example given above.
The type of funding arrangement you have with your solicitor can impact significantly upon the amount of compensation you receive for your injuries. It is very important that you fully understand the arrangement you are entering into from the outset of your claim. It is also important that you ask your solicitor to explain what deductions will be made from your compensation and ensure you fully understand the agreement they will ask you to sign.
Contact Osborne Morris & Morgan
OM&M’s policy on success fees and costs recovery has recently drawn comment from Action Against Medical Accidents (AvMA), a national charity for patient safety and justice:
“We were also very interested to note that you do not deduct a success fee or shortfall from damages. That has become increasingly unusual and we appreciate that it may in the future change but it is a real positive in terms of the client focus of OMM.”
If you believe that you have suffered from Medical Negligence, speak to our award-winning Medical Negligence team today on 01525 378177, or visit their team page online.