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Leading legal expenses insurance provider ARAG plc has hailed the landmark Court of Appeal judgment in West v Stockport NHS Foundation Trust and Demouilpied v Stockport NHS Foundation Trust as a triumph for access to justice for the victims of clinical negligence.

The judgment addresses how the key principles of reasonableness and proportionality should be properly applied when assessing the validity of the block-rated After-The-Event (ATE) insurance premiums that have been used to help fund clinical negligence actions since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

Commenting on the successful appeals, ARAG’s Underwriting and Marketing Director, David Haynes said:

"The Court has made it absolutely clear that ATE insurance, and recovery of the associated premium, is fundamental to the victims of clinical negligence being able to access justice, and that this must be the starting point for any debate about the recoverability of premiums.

Further, the judgment has provided vital and long-awaited clarity to guide costs judges when assessing the reasonableness and proportionality of ATE premiums in cases brought since the implementation of LASPO.

We are very pleased that a line has finally been drawn under the persistent and protracted challenges to the reasonableness and proportionality of block-rated ATE premiums for clinical negligence claims since LASPO. ATE insurance is essential for most clinical negligence cases and enables vulnerable people, who have experienced the worst misfortunes, to seek justice.

ARAG’s commitment to ensuring the widest possible access to justice has driven us to overcome these and numerous other challenges, such as the McMenemy and Reynolds cases, so that solicitors acting for clinical negligence victims can be confident that their ATE insurance premium will be recovered.

During the time that these cases have taken to resolve, millions of pounds in perfectly valid ATE premiums have remained unpaid, several ATE providers have decided to leave the market and one that was a party to this action has been driven into insolvency.

The Court has recognised that ATE insurance is a complex and interdependent mechanism without which seriously vulnerable people would be left without recourse or remedy, and that sustaining a healthy and responsible market for such products is fundamental to preserving access to justice. We are extremely pleased that the Court of Appeal has resolved these issues once and for all."

ARAG appointed specialist costs firm Kain Knight Costs Lawyers on behalf of the claimants who were represented by Costs Lawyer and Director Nick McDonnell and Senior Costs Draftsman and Negotiator Gary Redfern, together with Leading Costs Counsel Nick Bacon QC (4 New Square) and Junior Costs Counsel Rupert Cohen (Landmark Chambers).

Head of Claims at ARAG, Chris Millward added:

"The Court, in these cases and in McMenemy & Reynolds which preceded; has established absolute clarity around several key issues that have been used to challenge payment of ATE premiums in clinical negligence cases for several years.

The guidance provided on reasonableness and proportionality means that the onus is now clearly on defendants to provide robust evidence that an ATE premium is unreasonable and, once the reasonableness of a block-rated ATE premium has been established, it cannot subsequently be reduced on the grounds of proportionality as it falls into the category of unavoidable costs, without which the litigation could not have progressed.

Equally important is the recognition that challenges to block-rated premiums are likely to require an expert understanding of the ATE market and evidence from expert witnesses, so it is not the role of a district judge or costs judge to analyse the detail of policy wordings that are alleged to be comparable.

The Court has also made it clear that simply comparing a block-rated ATE premium with either the value of a claim or settlement sum in a specific case is not a reliable indicator of how reasonable the premium is, because it ignores underwriting principles and the wide range of cases with which it has been block-rated.

The Court has spelled out two key reasons why discounting a premium on the grounds of proportionality is inappropriate. First, reasonable block-rated premiums have no direct relationship to the value of a given claim. Second, ATE insurance is essential to access to justice in clinical negligence matters."

Click below to download the approved judgement:

Disclaimer - all information in this article was correct at time of publishing.