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Future medical expenses and loss of a chance - XYZ v Portsmouth Hospitals NHS Trust

The case of XYZ v Portsmouth Hospitals NHS Trust (Unreported, 14th February 2011) received widespread coverage in the press. It raises two areas of interest: the recoverability of future private medical expenses and a sliding scale of percentages applied to a loss of a chance calculation.

 

The claimant’s father had been suffering from renal failure and the claimant sought to donate his kidney to give his father a better quality of life. The operation was performed negligently and, to a degree, recklessly. The claimant’s life was saved after hours of operations and transfusions. The claimant was left with total renal failure and suffered a raft of far-reaching complications. In fact his sister successfully donated her kidney to him but he was left in fear that his body would reject her kidney which itself would need replacing in about 20 years. .

A number of heads of loss were agreed. Two issues remained outstanding: whether the claimant could recover the cost of future private medical treatment (as opposed to NHS) and the assessment of the chance of the claimant’s business succeeding.

Inevitably the claimant required future medical treatment and medication in relation to the monitoring of his kidney and eventual transplant surgery. The judge had to decide whether he could recover the private cost. The defendant’s case was that treatment and medication was readily available on the NHS. Practitioners will recall s.2(4) of the Law Reform (Personal Injuries) Act 1948 which requires the court to disregard the free healthcare offered by the NHS when determining the reasonableness of a claim for medical expenses. Case law makes it clear that the sole issue is whether the claimant has established that he will in fact use private medicine rather than the NHS (Woodrup v Nichol [1991] P.I.Q.R. 104). The judge had little difficulty in finding that the claimant would use private medical facilities and purchase private medication, not least as he had had a ‘catastrophic experience’ with the NHS. Three of the judge’s reasons could arguably be given by claimants generally: the desire to obtain advice from the consultant of choice, the desire to avoid the strain of fitting in appointments around the convenience of medical staff in the NHS and the opportunity of benefitting from new drug developments as soon as they come onto the market. The other reason given by him was that his regime of medication was so complicated that it was difficult to manage it under the NHS.

The bulk of the judge’s judgment is devoted to the claimant’s future loss of earnings. His case was that at the time of his operation (February 2008) he was on the threshold of a new stage in his career in a highly specialised area of market research in the pharmaceutical industry. He had been planning to set up his own agency. His case was that but for the accident he would have started up that business in September 2008 and after 2 years the turnover would have been £2 million, after 5 years it would have been £5 million and after 10 years, £10 million.

The judge found as a virtual certainty that the claimant would have successfully launched his agency in September 2008. He found that the claimant’s turnover would have reached £2 million after 2 years (i.e. by 1st November 2010). The judge was clearly impressed by the evidence of others who had set up agencies similar to that which the claimant sought to establish; their businesses provided powerful evidence of comparators. Indeed the judge was so impressed by the evidence that he considered that it was a virtual certainty (100%) that a turnover of £2 million would be achieved in 2 years. The judge went on to find there was a 50% chance that the claimant would achieve an annual turnover of £5 million within 5 years (i.e. by 1st November 2013).

What is striking about this case is what the judge did for the intervening years. He concluded it was unlikely that the claimant’s agency would have experienced an increase from £2 million to £5 million at the end of the third intermediate year (i.e. in 2013). Accordingly he took an average turnover figure of £3.5 million for the years 2010 to 2013. The percentage to be applied to that figure was 75% (the mid point between the virtual certainty of achieving a turnover of £2 million and the 50% chance of earning £5 million).

The judge went on to find that there was a 20% chance that the claimant’s business would have achieved a turnover of £10 million by 1st November 2018. Again, he applied the same logic that the agency would not have suddenly moved from a £5 million annual turnover to £10 million in 2017/8. However he was not persuaded that there would be a steady progression from £5 million to £10 million as if on a straight line graph; he considered there would have been an upward curve in turnover. Accordingly he found that in the first 2 years of the period the turnover would have been £5 million, for years 3 and 4 there would have been a turnover of £6.5 million and in the final year of the 5 year period the turnover would have been £8 million. As to the percentages to be applied to these figures, the judge’s logic remained the same. His conclusions are perhaps best looked at in tabular form:

Period

Anticipated turnover

Percentage chance

1st November 2010

£2 million

100%

2010 - 2011

£3.5 million

75%

2011 - 2012

£3.5 million

75%

2012 - 2013

£3.5 million

75%

2013 – 2015

£5 million

50%

2015 - 2017

£6.5 million

40%

2017 - 2018

£8 million

30%

2018

£10 million

20%

 

The judge went on to consider whether the claimant would have taken on an equity partner and what the net profit margin of the business would have been. He then went on to apply a further discount of 15% to take account of uncertainties and contingencies not already taken into account.

The claimant’s success in this case was clearly due to the fact that his past record in the pharmaceutical industry was very impressive and demonstrated that he had the capabilities and drive to set up his own agency. Indeed he had already drawn up a business plan when the negligent operation was performed. He was further assisted by the evidence of others who had set up agencies and who were able to provide their figures to show how their business had developed. That gave the judge important comparative evidence. It is striking however that the further into the future the judge was required to delve the more ready he was to apply a sliding scale of percentages to the projected income of the claimant’s agency. It is an interesting approach to the problem of a business which is projected to develop over time and to some extent contrasts with cases where the argument is about a claimant who, but for an accident, would have reached different levels of earnings.

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