Calculation of a compensation award
in a clinical negligence claim

Introduction

In May 2011 the High Court judgment in the case of Johnson v Fourie¹ attracted widespread publicity, due to the record award of over £6 million for a cosmetic surgery negligence claim. In addition to the damages awarded, the legal costs are also reported to run into several million pounds. This claim is exceptional but demonstrates how compensation payments are calculated.

The facts in a nutshell

In August 2003 the claimant, who was then 42, underwent cosmetic surgery including a minimal access cranial suspension (MACS) facelift. During surgery it is agreed that branches of the right facial nerve were damaged, resulting in abnormal spontaneous facial movements and other symptoms. The psychological impact included periods of depression and anxiety, persisting to the current day.

The clinical negligence claim was brought in 2007. Liability was admitted, leaving the amount of compensation that should be awarded to be decided by the Court.

Damages

Compensation payments are made up of two distinct elements: general damages for pain, suffering and loss of amenity; and special damages to compensate the claimant for the quantifiable monetary losses suffered as a direct result of the physical and mental harm caused by the negligence. Special damages include such items as additional domestic and medical costs and past and future loss of earnings, including lost profits in a business.

There were a number of aspects to the claim for general damages: the pain and distress suffered in the aftermath of surgery, the facial disfigurement, disfigurement of the left breast (also operated on at the same time) and subsequent psychological damage.

The claim for loss of earnings, both past and future, amounted to over £50 million. From March 2001, the claimant was engaged in developing a software company which she co-owned. In the year ending 31 March 2002 the company turned over £2,197,358 with a gross profit of £420,473 and, by December 2003, the turnover had risen to £3,143,549 with a gross profit of £868,811. The judge found that had the claimant been fully involved in the business between 2003 and the beginning of 2011, there was a real and substantial chance that the business would have achieved a turnover of not less than £25 million per annum.

On that basis past and future loss of earnings were calculated to be £1,733,482, and £4,173,052 respectively.

Breakdown of damages

The implications for surgeons

This is an exceptional case which illustrates several important points about clinical negligence claims. The first is that compensation is nothing to do with the degree of negligence, but turns on the money required to restore the patient to the position they would have been in but for the negligent care. In short, you take your patients as you find them. The second is that damages for pain, suffering and loss of amenity follow guidelines issued by the Judicial Studies Review Board and are usually less than £100,000. However, compensation for specified losses, such as loss of earnings is not capped, and so can run in to the millions.

Having secure levels of indemnity in place is essential - insurance is all about protection against catastrophic events. If the indemnity limit does not cover the damages and legal costs the surgeon faces bankruptcy.

Other considerations

One point that the court appears not to have considered in this case is whether there are public policy considerations around the level of damages that it is reasonable to award. Is it realistic for very high earners to be compensated for all their loss of earnings, even if this runs in to many tens of millions of pounds? Is it in the public interest to allow such high awards, with the inevitable effects on professional indemnity premiums and patient selection?

To some extent these issues were touched on in the Court of Appeal in 2005. In the claim brought by West Bromwich Albion FC against an orthopaedic surgeon², the judge asked if a consultant should take steps to ascertain the value of high earners so as to evaluate his potential liability, and whether she/he should seek to put in hand a disclaimer or limitation of his liability, how that could be done and how insurance premiums would be affected. Perhaps the time has come for answers to these questions.

There is a choice of Limits of Indemnity on your SIS policy of either £5m or £10m any one claim and in the annual aggregate.

¹ Johnson v Fourie [2011] EWHC 1062 (QB).
² West Bromwich Albion Football Club Limited v El Safty [2005] EWHC 2866 (QB) .