Long-running negotiations with the Medical Defence Union led to a settlement of €45 million
The net effect of the settlement agreed between the Government and the Medical Defence Union is that the State will receive €45 million. However, it is likely to have to pay out considerably more overall in meeting the cost of negligence claims against members and former members of the indemnity organisation.
The Medical Defence Union was one of two UK-based indemnity organisations which provided cover for doctors in Ireland for decades. In the case of many doctors working in the public system, the State subsidised the premium cost. However, the Medical Defence Union is not an insurance company but a mutual organisation. The provision of cover for members is not guaranteed, rather it is discretionary.
Clinical negligence
The row between the Government and the Medical Defence Union dates back to the introduction by the State of a clinical indemnity scheme nearly a decade ago, largely because of concerns about costs.
The scheme, which is operated by the State Claims Agency, manages clinical negligence claims against public hospitals and doctors. At the time of its introduction, the then government decided it would have no retrospective effect. The scheme came into effect for hospital consultants from February 2004.
The Medical Defence Union contended the State should take over the historic liabilities of its members in respect of claims that occurred prior to the introduction of the scheme. It argued the introduction of the scheme deprived it of vital income to meet its historic liabilities in Ireland.
When no agreement was reached on this issue with the government, the organisation subsequently began to refuse cover to its existing and former consultant members in Ireland.
In late 2004 the Department of Health introduced an arrangement whereby consultants who were refused indemnity by the Medical Defence Union would have their cases handled to completion by solicitors nominated by their representative body.
At the end of proceedings, application could be made to the Minister for ex gratia assistance in relation to the payment of the settlement/award of damages and associated legal costs.
Ex gratia payments
Official figures obtained by The Irish Times show that since 2004 the State has made 145 such ex gratia payments at a cost of €47 million including legal costs.
The Department of Health said it was aware of a further 120 cases in which payment had not yet been made.
The Department of Health last week announced it had received €45 million from the Medical Defence Union in full and final settlement.
It has declined to estimate the total amount it will ultimately have to pay to deal with all negligence claims against members and former members of the Medical Defence Union. “The potential liabilities are comprised of the outstanding known claims plus a further possible exposure [contingent liability] of ‘incurred but not reported’ [IBNR] claims spread over a 10- 15-year period.
“Background information relating to the agreement was obtained during the course of settlement negotiations and is subject to legal professional privilege. Information received from the MDU in devising the estimate of future liabilities is subject to a confidentiality clause under the agreement. The State’s legal strategy and estimate of future liabilities are commercially sensitive and are not being disclosed.”
The figures suggest it will be considerably in excess of the €45 million it received last week.
State priority
The Department of Health said the priority of the State was “to obtain the best possible deal in order to bring this protracted dispute which dates back many years to a satisfactory conclusion”.
“The issues involved were complex and the Minister for Health and the Government took account of extensive legal and technical advice in deciding to reopen settlement negotiations with the Medical Defence Union and subsequently in regard to the conduct of the negotiations and the eventual finalisation of the agreement.
“The Government was satisfied on foot of this advice that the offer of €45 million represented the best possible settlement that could be achieved in respect of the ongoing, intractable litigation between the parties and should therefore be accepted.”
The former minister for health Mary Harney said in 2005 that the State believed the total bill for dealing with the claims could reach €400 million.
Future liabilities
The Department of Health said that detailed work on the estimate of future liabilities was carried out in the lead-up to finalisation of the agreement with the Medical Defence Union.
It said that “for various reasons including legal professional privilege and commercial sensitivity the estimate of future liabilities” was not being disclosed.
“However, it can be stated that the estimated overall exposure to the State [ie including payments made to date] is less than 50 per cent of the estimate [€400 million] quoted by the previous minister in February 2005.”
Ms Harney in 2005 had suggested the Medical Defence Union’s estimate on the cost of claims was around €160 million.
The Medical Protection Society (MPS) is the only other discretionary indemnifier offering indemnity to consultants and other medical practitioners in Ireland.
The Department of Health said the MPS has honoured its historic liabilities.
