Global healthcare: quantum comparison report - February 2020
In recent years, developments in the law have given rise to escalating damage awards. Healthcare costs have also increased exponentially over the last decade, with larger future cost of care awards increasing the total amount of the claim.
The combined effect of increased care costs and new heads of loss has led to damages awards in cases involving catastrophically injured claimants in England to reach £20 million plus. Interestingly, damages awards for the same injuries vary significantly in jurisdictions around the world.
In this section, we have used a recently settled English claim as a case study to consider and compare what the settlement value may have been, based on the legislation and principles applied in four other jurisdictions – Hong Kong, Australia, Spain and Ireland.
The claimant suffered a serious brain injury at birth and now suffers from left diplegic dystonic cerebral palsy, mild motor disabilities, epilepsy (relatively controlled) and is Gross Motor Function Classification System II.
The claimant is semi-independent in self-care, with normal manual dexterity and able to walk up to half a mile, and will require 24-hour care. The claimant does not have capacity, is vulnerable, has learning difficulties, and sensorineural hearing loss. Life expectancy was agreed to age 81.
Liability was admitted in the claimant’s favour. The claim settled in November 2019 at £21,899,635.
Following the return of sovereignty to China in 1997, Hong Kong continues to follow the common law legal system.
As affirmed by the Privy Council, compensation for a claimant in respect of a tort (including a claimant in medical negligence claims) is based on a ‘full compensation’ principle. This means a claimant who has suffered as a result of medical negligence is entitled to be compensated, as far as possible, for all pecuniary losses.
Compensation for medical negligence claims consists of both past and future losses. It also includes general damages to compensate for pain, suffering and loss of amenity.
The starting point when assessing general damages is to consider case law, with consideration given to any special features.
The judgment in Lee Ting Lam and Leung Kam-Ming An Infant By His Next Friend v Leung Shu-Wing , helpfully sets out four categories providing guidance in assessing the level and range of general damages, as follows:
- Serious injury
- Substantial injury
- Gross disability
Serious mental disability, sensorineural hearing loss, epilepsy, learning difficulties suffered/continued to be suffered by her and the claimants need for 24-hour care, would be consistent with the ‘disaster’ category.
Currently, the highest reported damages in Hong Kong for pain, suffering and loss of amenity is HK$2.5 million (approximately £250,000).
Estimated general damages: HK$2 million (approximately £200,000) plus interest.
Similar to the approach taken in England and Wales, judges in Hong Kong tend to allow past losses and expenses that have been properly and reasonably incurred, even without supporting receipts.
Commonly claimed and awarded past losses include:
- Past gratuitous care
- Travel and transportation
- Cost of setting up a committee for managing assets and damages to be received by the claimant (similar to Deputy and Court of Protection costs in England and Wales)
- Therapy and medical treatment costs
- Miscellaneous costs (for example, extra laundry costs, swimming lessons, and tonic food such as Chinese medicine soup).
There is a substantial difference between the assessment for past gratuitous care in Hong Kong and in England and Wales. In Hong Kong, live-in domestic help is relatively more affordable. The annual cost of a live-in domestic helper is approximately HK$64,000 (inclusive of agency fees, visa and other associated costs).
- Usually for past care, the claimant will claim for care provided by one parent or the spouse, in addition to one live-in domestic helper because they may not be able to accommodate two helpers in their current living arrangements.
- The wage of a live-in full-time carer and/or the loss of salary of a close family member for the initial hospitalisation period until a full-time carer is on-board, is normally allowed.
- Other out-of-pocket expenses (medical, travel and transport, and miscellaneous expenses), and the cost of setting up a committee for managing damages and assets will usually be allowed in full, in so far as they were reasonably incurred as a result of the incident.
Total estimated damages for past losses: HK$1,618,000 (approximately £161,800) plus interest.
Prior to 2012, in relation to the discount rate for future losses, courts in Hong Kong applied a net rate of return of 4.5%.
In the landmark discount rate trial of Chan Pak Ting v Chan Chi Kuen  and Chan Pak Ting v Chan Chi Kuen (No 2) , the High Court in Hong Kong reviewed previous authorities on the assessment of future economic loss, concluding the assumption of a net rate of return of 4.5% per annum was no longer valid in Hong Kong.
- Taking into account expert evidence on the change of economic landscape, economic historical investment returns and the structure of investment vehicles, the High Court moved away from the conventional multiplier approach (i.e. reference to decided cases).
- Instead, the court held the multiplier for future loss should be calculated by reference to the discount rate (a reflection of the interest rate or rate of return from investment) and actuarial tables.
- The court held the discount rate for claimants with future needs should be, in a set of three discount rates: (a) -0.5% for needs up to five years; (b) 1% for needs above five and up to 10 years; (c) 5% for needs beyond 10 years
- The decision was subsequently confirmed by the Court of Appeal in Hong Kong in Chan Wai Ming v Leung Shing Wah . Kennedys acted on behalf of the Hospital Authority in Hong Kong on this claim.
- The cost of care in Hong Kong is considerably lower than in the UK. The estimate of the cost of future care and management, is based on the following assumptions: (a) From the date of incident up to age 65, the claimant attending a day school/shelter centre and staying with family at home; and (b) After age 65, the claimant being admitted to a nursing home for institutional care.
- Claimants may claim compensation either for the additional cost of renting larger alternative accommodation and the associated costs. Alternatively, claimants may claim the additional annual costs of an alternative property that has been purchased. The claimant is not entitled to recover the cost of rent or mortgage payments that they would have incurred in any event over their lifetime, but for the accident.
- Case law in Hong Kong indicates that if the claimant was renting a property at the time of the accident, it is debatable as to whether the claimant should be entitled to recover the costs associated with purchasing (as opposed to renting) alternative accommodation after the incident. If the claimant was renting, the additional rental costs for extra space in the same district, together with associated adaptation costs, is usually the courts’ preferred approach. However, assessment will depend very much on the factual circumstances of each case.
- In relation to the case study, the additional costs of renting larger accommodation together with the helpers and family up to the age of 65 only, has been applied on the assumption that the claimant would then be admitted to a nursing home with the associated costs of that care from age 65.
Aids and equipment, travel and transport etc.
- Awards for future costs of aids and equipment, travel and transport, therapies and medical treatment, assistive technology and miscellaneous expenses, are dependent upon expert evidence and what is considered reasonable.
Loss of earnings and pensions
- It is arguable that a lump sum award would be appropriate, given the speculative nature of this head of claim for claimants who have not started working. There are however, cases where the court will adopt a multiplier approach for this head of claim.
- The difficulty is there are many uncertainties impacting on what the claimant might have been able to do but for the incident. In those circumstances, reference is made to the education and career of the claimant’s parents and any siblings, but this can only provide some indication. We should also bear in mind successful parents does not always lead to successful children.
- Holiday costs together with family and helpers is commonly claimed, but is always subject to argument, and therefore a nominal sum is typically allowed.
Management of the claimant’s damages and assets
- Once the committee to manage the claimants damages and assets has been set up, no future ongoing costs related to the management of the claimant’s financial affairs is recoverable. This is because future applications can be made by family members on behalf of the claimant without the need for legal representation.
Estimated damages for future losses: HK$34,816,566 (approximately £3,481,656)
The total estimated damages award in Hong Kong for this case study would be HK$38,434,566 (approximately £3,843,456)
Author: Sandy Cho
Australia (New South Wales)
Several heads of loss that apply in England and Wales are also applicable in New South Wales (NSW). However, there are a few major areas of difference.
- The underlying principle for the award of damages in NSW is to restore the plaintiff to the position that they would have been in, had there been no wrong committed. This is not in itself dissimilar to that of England and Wales.
- However, a number of the costs claimed for, such as those for horse riding, swimming lessons and aids/equipment such as an electric buggy or scooter, are unlikely to be considered reasonable and necessary as a result of the plaintiff’s injury.
- Another example is the cost of holidays, in which only the additional cost of holidays as a result of the incident (for example, the cost of carers and equipment) would be allowed in NSW, rather than the cost of the trips themselves.
Legislation assists greatly with the calculation of damages through various caps/thresholds for both past and future loss, general damages, and the applicable discount rates.
- General damages (also called ‘non-economic loss’ in NSW) are calculated with reference to a benchmark, but with less precise categories than those within the Judicial College Guidelines used in England and Wales.
- In NSW, a percentage estimate for general damages is applied by comparing the matter with case law and percentages that judges have awarded in similar cases. The assessment of general damages depends on the circumstances of each plaintiff and no two injuries are the same. Further, the consequences of apparently similar injuries may vary in different individuals. The court is required to assess the totality of the injuries, rather than each injury individually.
- The amount awarded is calculated in accordance with a formula set out in legislation. There is a threshold of 15% of a most extreme case required in order to award general damages, although this is not difficult to satisfy. The circumstances of this case study would satisfy the most extreme case.
Estimated general damages (based on the maximum award): A$635,000 (approximately £355,600)
Unlike in England and Wales, interest cannot be claimed on general damages in NSW.
- Past losses are categorised into care and assistance (including expenses such as travel and transport, laundry assistance and swimming lessons), treatment expenses, and economic loss.
- Care and assistance can be gratuitous or commercial (or a combination of both), with legislation providing a statutory threshold and cap for past gratuitous care. Past gratuitous care is also paid at a statutory rate. Commercial assistance is not limited. Plaintiffs also provide schedules of treatment expenses and care expenses with supporting documents.
- Damages are not available for Deputy and Court of Protection costs. The cost of the management of the plaintiff’s funds are recoverable under a separate head of damages called funds management, and this is dealt with under future losses.
Total estimate for past losses: A$1,058,500 (approximately £592,761)
- Discount rates are prescribed by legislation and in NSW a discount rate of 5% applies.
- Life expectancy is determined by actuarial tables. If life expectancy is expected to diverge from those tables, parties will obtain expert evidence in that regard. A discount for vicissitudes is applied, ordinarily 15% (unless evidence is obtained to the contrary) to allow for future unpredictable events.
- Courts tend to allow what is reasonable and necessary as a result of the plaintiff’s injuries, rather than what is ideal but may provide limited benefit.
- With regard to accommodation claims, NSW does not have a calculation comparable to Roberts v Johnstone. Generally, what will be awarded is the cost of full modifications or the cost of a purpose built home less the increase in capital value. Given the plaintiff in the case study intended to live with their family in rented accommodation for a period of time, a court is likely to award her the reasonable additional cost of adaptions to the home for that period. Home maintenance and running costs are also awarded. This is subject to expert evidence.
- For loss of earnings, the maximum that can be awarded for loss of earning capacity is three times the average weekly earnings in NSW. Economic loss is generally awarded until retirement age in Australia, being 67 years of age. The plaintiff is also entitled to loss of employer superannuation contributions based on income.
Total estimate for future losses: A$14,280,052 (approximately £7,996,829)
The total estimated damages award in New South Wales for this case study would be A$15,973,552 (approximately: £8,945,190)
Author: Raylee Hartwell
- Similar to England and Wales and to NSW (Australia), the Victorian scheme allows for compensation for past and future care and treatment needs, with a view to putting the claimant in the position they were in prior to the alleged injuries.
- There are also some other differences to the Victorian system when compared to England and Wales (and NSW), including statutory threshold requirements for general damages and limits to future economic loss claims.
- Victoria also has an office attached to the Supreme Court of Victoria (Funds in Court) that administers funds on behalf of minors and persons under a disability. The Senior Master in charge of the Funds in Court has been very successful in managing these funds and this has allowed both a reduction on the costs of financial management and a reduction in settlement payments to allow for interest.
- In Victoria, claimants are required to meet a statutory threshold of more than 5% whole person impairment for physical injuries and 10% for psychological injuries. Given the claimant in the case study suffered a hypoxic brain injury, they would prima facie meet the minimum threshold requirements. The current statutory maximum in Victoria is A$599,360 plus interest (subject to Reserve Bank interest rates, and currently at 10%).
Estimate of general damages: A$550,000 (noting that more catastrophic injuries would be awarded the statutory maximum)
Total estimate for general damages (incl. interest): A$605,000 (approximately £338,800)
- Generally, past loss is divided into three categories: past economic loss, gratuitous care (subject to a statutory threshold and maximum), and medical and like expenses.
- The threshold for past gratuitous care requires a claimant to have had at least six hours of care per week for more than six months, generally from the age of three years old (on the basis of all children requiring 24-hour care to the age of three). The statutory maximum for past care is 40 hours per week (approximately A$27 per hour at present), which is based on the average weekly earnings of all Victoria.
Estimate of past gratuitous care (based on care from three years old, at an allowance of 32 hours per week (i.e. four hours per weekday and 12 hours on the weekend): A$260,188 (approximately £145,705)
- With respect to past medical and like expenses, we would make allowances for a number of these expenses, which could include repayments to Medicare (funding for the Australian public healthcare system), private health insurance and other statutory schemes (including unemployment or carer benefits).
- The assessment would also include reimbursement of out of pocket expenses for medication, travel costs associated with medical appointments, and a penalty interest of 10%.
Estimate for past medical and like expenses: A$15,000 (approximately £8,400)
- Unlike the UK, we do not have Deputy and Court of Protection costs, and litigation guardians are typically parents or an adult family member, appointed by the courts.
Total estimate for past losses (incl. interest): A$276,000 (approximately £154,560)
Claimants receive compensation for future loss as a single lump sum adjusted to the appropriate multiplier (such as weekly, fixed term or deferral factors). The multiplier used in Victoria effectively calculates the interest the claimant would have accrued on the lump sum, thus preventing a windfall.
Future economic loss
- We would allow future economic loss at the average weekly earnings (less tax) plus superannuation (currently A$1,157), and apply a fixed term deferral from age 21 to retirement. Assessments for future economic loss also take into account vicissitudes, which the court has generally accepted as a 15% discount.
Estimate for future economic loss (which is in line with the UK assessment): A$770,000 (approximately £430,640)
Future care and case management
- This head of damage varies moderately between the Victorian and England and Wales jurisdictions. In Victoria, day care is assessed at 14 hours of ‘active care’ and 10 hours of ‘overnight care (inactive care)’, and depends on where the plaintiff lives and when the care is required.
- Victorian rates for case management are generally for 120 hours per year from current until death at approximately A$160 per hour.
Estimate for future care and case management (which takes into account the relevant age bracket and care needs at that stage of life): A$7.4 million (approximately £4,142,320)
Accommodation and building costs
- In Victoria, the court would accept an allowance for home modifications until the age of 21 years, and thereafter the difference between the cost of a normal home and modified home (subject to independence) using a deferral factor.
- Generally an allowance would be made for modifications (i.e. equipment maintenance and replacement) to the current home and a deferred allowance for future modifications from age 65 years.
Estimate of accommodation and building costs: A$1,190,000 (approximately £610,300)
Travel and transport
- Claims are rarely made for future travel and transport and certainly not for a vehicle, which claimants are expected to have required in any event.
- Allowance would be made for modification costs to a car or a wheelchair accessible car (being the difference between a standard vehicle and an accessible vehicle).
- An allowance would be made for a limited amount of holidays such as a trip to Algeria with two carers every five years, and to Europe annually.
- The base cost of the holiday is not part of this allowance, but the additional costs due to the injuries (carers costs) would be incorporated into the allowance.
Estimate: A$370,000 (approximately £207,000)
Aids and equipment, therapies and medical treatment, assistive technology and miscellaneous costs
Allowance for some of these costs (as set out below) would be made, subject to evidence demonstrating that they are reasonably required.
- Aids and equipment (including any assistive technology): A$185,000 (approximately £106,600)
- Therapy related costs: A$600,000 (approximately £336,000)
- Deputyship and Court of Protection costs (Funds in Court costs, assessed at 4.7% of the settlement amount) at approximately A$1,380,000 (approximately £770,000)
- Miscellaneous costs: A$520,000 (approximately £290,000)
Total estimate for future loss (incl. interest): A$12,415,000 (approximately £6,952,400)
The total estimated damages award in Victoria for this case study would be A$13,296,000 (approximately £7,445,760)
Author: Cindy Tucker
In Spain, the approach to valuing damages in medical malpractice claims is influenced greatly by a scale of damages. Parties to a medical malpractice claim and judges apply the scale to value such claims, notwithstanding the judge’s discretion to depart from the strict criteria of the system, given the scale is only compulsory for road traffic claims.
- The scale of damages is a series of extensive tables which take into account a points total for the permanent injuries suffered (as assessed by a medical expert), the age of the claimant, their income, number of days of incapacity, and various other factors.
- Based on the medical conditions suffered, the scale also provides for future medical and care costs. Additional moral damages apply to medical conditions that reach a specific level of points, with an award also possible for family members if their quality of life is affected by medical conditions of the claimant.
- Guidance from case law can also be used as an alternative means of valuing medical malpractice claims.
In Spain, general damages are formed of the following elements:
Permanent physical conditions
- Medical experts are required to examine the claimant in order to determine any long-term physical impacts. Each individual injury will be awarded a points value and a cumulative total obtained. In Spain there is no provision for the joint instruction of a medical expert, so each party will be expected to provide a medical report. This often gives rise to large discrepancies in valuations, with a judge having to determine an appropriate value based on the medical evidence at trial.
Estimated approximate value of damages: €484,510 (approximately £410,601)
- This is an independent concept but calculated with reference to a points system as described above.
- Estimated damages for this element are taken into account in the figure for permanent physical conditions above.
- These are days during which the claimant cannot carry out daily activities until full recovery is achieved, or when the injuries are considered to be stabilised, with no further improvement likely.
- There are four categories of incapacity days under the scale of damages – ‘very serious’, ‘serious’, ‘moderate’ and ‘basic’ depending on the level of incapacitation, with the daily values ranging from approximately €30 to €100 per day.
Estimated damages (based on an assumed six month period before the medical conditions could be considered as being stabilised, with a value of €100 per day): €18,000 (approximately £15,254)
- Taking into account the severity of the injuries in this case study, the estimated damages are: €246,000 (approximately £208,475)
Total estimate for general damages: €748,510 (approximately £634,331)
- These are limited to actual expenses incurred, such as medical expenses or expenses for care and assistance, and would require documentary evidence to be indemnified. As such, claims for gratuitous care and assistance are unlikely to be recovered in Spain, although the Spanish system does include an award for the loss of quality for family members, details of which are set out below.
These will typically include the following:
Future medical expenses
- Under the Spanish system future medical expenses are to be paid directly by insurers to the public health system. This can be based on the cost of actual treatment, or insurers and health authorities can agree lump sum payments.
- Damages are recoverable for home adaptations. There is a maximum award available under the scale of damages and the same sum is recoverable to make up any difference in house or rent value if home adaptations are not sufficient and the claimant has to move home.
Increased mobility costs
- Damages are recoverable for the claimant’s loss of autonomy and the difficulties using public transport to carry out their normal activities.
Third party assistance
- Based on supportive medical evidence for third party assistance, the scale of damages provides for a daily number of hours that the claimant requires. Based on the age of the claimant, an appropriate award is made which is payable directly to them. Provided that the assistance is medically justified, the corresponding award is payable irrespective of whether the assistance provided is remunerated or not.
Loss of income
- This loss is calculated with reference to the age of the claimant and their income. In circumstances where the claimant is a minor that has not begun to work, the relevant calculation only takes into account loss of income from 30 years of age onwards.
Moral damage for loss of quality of life for family
- Should the life of family members be affected by the claimant’s condition, an award is available for such moral damages, which can amount to €145,000.
Estimated future damages (consisting largely of future medical expenses and provision for professional care and assistance): €2 million (approximately £1,694,915)
The total estimated damages award in Spain for this case study would be: €2,748,510 (approximately £2,329,246)
Author: Alfonso De Ramos
- In Ireland, the approach to assessing general damages is almost entirely based on case law. The courts have regard to the Book of Quantum, which provides a very broad guideline on the level of compensation for certain injuries and is less detailed than the Judicial College Guidelines.
- In relation to catastrophic injuries, there is a notional ‘cap’ on general damages. This is not a fixed statutory cap, therefore judges have a wide discretion on the application of the ‘cap’. Until recently the ‘cap’ was perceived to be €450,000. This figure was increased to €500,000 in the case of Ruth Morrissey v MedLab et al (May 2019) (which is currently under appeal by Kennedys to the Supreme Court).
- The level of damages in Ireland is well-known for being higher than other jurisdictions, particularly in relation to claims for minor to moderate injuries. The highest reported approved settlement in the state is €32 million (General and Special damages). This case concerned a nine year old boy who suffered neurological injury and permanent physical disability, following misdiagnosis of a brain infection.
Estimate for general damages: €500,000 (approximately £423,728)
Past losses are categorised into a number of different heads of damage, including:
- Past care (gratuitous and professional)
- Medical expenses
- Treatment expenses
- Ward of Court costs (similar to Deputy and Court of Protection costs in England)
- Miscellaneous costs (including travel costs)
- Past loss of earnings.
The claimant’s schedule of special damages is supported with vouching documentation. In catastrophically injured cases this document is usually prepared with the assistance of an actuary.
- The courts in Ireland will usually allow all past losses which have been reasonably incurred (even without supporting documentation). Unlike in England and Wales, the quantified schedule of loss is often not served until the close of pleadings. Further, in Ireland there is no requirement to serve a Counter-Schedule of Loss.
- Past gratuitous care is usually calculated at the Home Support Services home help rate of €14 per hour (this rate is already reduced from the paid care rate). Travel costs are usually calculated at the government rate (approximately €.39 cent).
Estimate of past losses: €300,000 (approximately £254,237)
- In the leading case of Gill Russell (a minor) v Health Service Executive  (this decision was upheld by the Court of Appeal in 2015), Cross J held the appropriate rate of return to be between 1% and 1.5%. The real rate of return in future loss of earnings is applied at 1.5% and the cost of future non-wage related care is applied at 1.5%. However, the future cost of care which is wage related is applied at 1% e.g. nursing and other similar care.
- In Ireland, future losses are calculated by reference to the Irish Life Tables (the equivalent to the Ogden tables in the UK). The main difference between the Irish Life Tables and the Ogden tables is that the former do not take into account future mortality when calculating relevant multipliers.
- The main issues of contention in respect of care claims in Ireland often come down to the hourly rate claimed (as well as the number of hours claimed).
- Defendants typically argue for Irish Wheelchair Association rates (€24.50 weekdays, €27.50 Saturdays and €30 Sundays).
Loss of earnings
- In respect of loss of earnings, the courts will usually assume this to start at the age of 22 and continue, until the age of 68, which is the state pension age in Ireland.
The leading case for the calculation of accommodation costs in Ireland is set out in the decision of Charlotte Barry (a minor) v The National Maternity Hospital .
- In that case the court assessed the value of the accommodation claim as follows: the value of the existing family home, less an appropriate adjustment. By way of an example, if the claimant has four siblings and two living parents this would be one sixth share of the existing family home until age 22.
- Rather than valuing expenditure on the house as a capital sum, the court values the loss of interest on the capital that would be tied up on purchasing the house (at the rate of 1.5%), and then applies this to the life multiplier based on the life expectancy of the claimant.
- The court also applies an adjustment to the value of the new house to allow for the value of the existing house that essentially would represent the cost of providing accommodation for the claimant had he/she been born “a normal healthy child”.
In Ireland, to calculate the value of the future accommodation in line with the rules in the Barry case, the following information is required:
- The cost of the new house
- The value of the existing house
- The fraction of the existing house that should be considered the claimant’s interest in it
- The life expectancy of the claimant
- The cost of adaptations
- The added value of the adaptations.
Using the Barry calculation, a rate of return at 1.5% and up to the age of 81, accommodation costs are estimated at €662,573 (approximately £561,503).
Total estimated future costs (to include accommodation costs): €12,158,075 (approximately £10,303,453)
The total estimated damages award in Ireland for this case study would be: €12,958,075 (approximately £10,981,419)
Author: Joanne O’Sullivan
As can be seen from the table below, no other jurisdictions damages award for this case study are anywhere near to the damages awarded in the English claim. Many other jurisdictions have statutory tables and caps to ensure compensation payments do not escalate. Many heads of loss are simply not recoverable in other jurisdictions, like the base costs for holidays or various hobbies. It is clear from this comparative study that other jurisdictions intervene to cap compensation awards in relation to recoverability and the extent, by for example, limiting care costs to a certain number of hours and particular hourly rates.
It remains to be seen whether the new Conservative Government will have any appetite to consider law reform imposing statutory control on the quantification of damages.
Defendant assessment of quantum (£)
Difference with UK case study settlement* (£)
*Case study settled at £21,189,635
Related item: Global healthcare update - February 2020