Who pays for Care & Accommodation? Peters and Beyond
In cases of catastrophic personal injury, the question often asked is: who should pay for the claimant’s future care and accommodation needs? Claimants will usually look to the defendant to pay for private provision. Historically, defendants have argued that because the claimant has a statutory right to receive care from the local authority and/or NHS they are not liable to meet privately funded care and accommodation. Consequently, if the claimant chose not to exercise their statutory right to nursing care under section 1(2) NHS Act 1977 and/or accommodation needs under section 21(1) National Assistance Act 1948 they were deemed (as far as the defendant was concerned), to have failed in their duty to mitigate their loss.
The law before Peters:
The case of Hodgson v Trapp
 established a general rule that any benefits received as a result of the tort are deductible from damages in order to prevent double recovery.
The case of Firth v Geo Ackroyd Junior Ltd
 followed this principle and held that any award for cost of care would lead to double recovery because the claimant was entitled to receive free care from the local authority.
In the cases of Bell v Todd
 and Ryan v Liverpool HA
 the local authority was joined as a party and sought a declaration that it was entitled to take into account income generated by an award of damages when determining the claimants statutory entitlement to care. Judge Burnton held that damages could not be taken into account when means testing the claimant’s ability to pay under section 22 of the NAA 1948 and on that basis the claimants damages were reduced to avoid double recovery of care.
However, the case of Crookdake v Drury
 found that a defendant could not rely upon the local authority's statutory duty to provide care for the claimant as the accommodation and ancillary services it was able to provide fell well short of the care regime the claimant actually required. This decision was upheld on appeal.
It was held in Sowden v Lodge
 that ‘’top up’’ payments to supplement publicly funded long-term care were recoverable but the feasibility of the proposed augmentation had to be proved by evidence. In this case the claimant’s claim was subject to a 50% deduction for contributory negligence. In determining whether a private arrangement or LA provided residential arrangement was appropriate, the fact that damages would be reduced by contributory fault should not be taken into account.
In Walton v Calderdale Healthcare NHS Trust
 the claimant had established that his reasonable care needs required annual periodic payments at a set rate agreed by the experts. The defendants sought a reduction of PPs on the grounds that the LA would contribute to some extent to the claimants care. Judge Silber rejected the defendants arguments on the basis that they had failed to adduce any evidence to show that the LA would provide for the claimants future care needs. The case of Godbold v Mahmood
 applied this same principle and the defendant was ordered to fund all future care for the claimant.
In Freeman v Lockett
 it was held the defendant had failed to discharge its burden of proof as it was not possible for the court to guess whether the local authority would continue to provide financial assistance in respect of care costs for the claimant in the future. Periodic payments were not appropriate in that case and so a lump sum was ordered to be made with no deduction for future care costs to ensure the claimant would have sufficient funds for care in the future.
In contrast to Freeman
, in Crofton v NHSLA
 it was held that if the defendant can provide evidence of direct payments from the LA under section 29 of NNA 1948 in respect of future care costs for the claimant, then a reduction in damages could be made to avoid double recovery.
The landmark case of Peter’s v East Midland SHA and Nottingham CC :
The claimant contracted congenital rubella syndrome and was seriously disabled as a result of NHS doctors failing to vaccinate her mother against rubella. She required substantial care for the rest of her life in a residential care home. At the time of the judgment the claimant was 20 years old and her life expectancy was said to be 68.5 years. It was therefore necessary to make provisions for funding of care and accommodation costs for several years into the future.
The claimant made a claim for the defendants to pay for her care at a private care home. Predictably, the defendants argued that they should not have to pay for the claimant’s private care on the grounds that she had a statutory right to free care and accommodation paid for by her local authority and Primary Care Trust.
Lord Justice Dyson in the Court of Appeal held “We can see no reason in policy or principle which requires us to hold that a claimant who wishes to opt for self-funding and damages in preference to reliance on the statutory obligations of a public authority should not be entitled to do so as a matter of right… provided there was no real risk of double recovery.”
In order to deal with the defendants so called ‘’windfall’’ arguments identified in Crofton, the Court of Appeal suggested that a practical way around the problem would be the giving of undertakings by the claimants Deputy who was administering the claimant’s affairs. This included the requirement to notify the defendant if, at some point in the future, the Deputy decides to apply for public funding.
This was argued to be an effective way of dealing with the problem of double recovery as it places any future decisions about whether a claimant will be able to apply for public funding of their care costs in the hands of the Court. It also avoids the need for local authorities or Primary Care Trusts becoming involved in funding issues.
Lord Justice Longmore commented in Sowden that “if no award for care is made at all… the defendant… will have received an undeserved windfall”
, and it is a perfectly rational school of thought that the guilty defendant and not the hard pressed public purse should pay for the claimant’s care costs. However, Lord Justice Dyson noted in Crofton
the counter argument that “if the Claimant does not give credit for benefits he will receive from the state… he will make a double recovery”
The Department for Constitutional Affairs examined the issue of double recovery as part of a consultation exercise, The Law on Damages, in 2007 and stated “the most appropriate outcome… is one where the Claimant is compensated for his or her losses, but only once; and wherever practicable at the expense of the… [Defendant] rather than the [authority responsible for paying for the care costs]…”
The solutions proposed by the DCA were either:
- The future care costs would be deducted from the Claimant’s damages award and the local authority would be able to recover the costs of care from the Defendant or
- The future care costs are disregarded when assessing the Claimant’s damages and the local authority is entitled to recover these from the Defendant
The Government preferred the second option; however the consultation has to date not been acted upon and therefore it is the latest decision of Peters
which has changed the law.Peters
attempted to solve the problem of double recovery by suggesting that the solicitor acting as the claimant’s deputy make undertakings. However, the case did not deal with what happens in the case of a claimant with full mental capacity. In practical terms, it seems unlikely that solicitors of claimants with substantial future care needs would be willing to give such wide reaching undertakings for several years into the future – Unlike Deputy’s acting for claimants under a disability, they will not have the ability to exert control over the administration and decision making process of the claimant’s future care funding needs. Perhaps the Courts will simply expect defendants to be more trusting of claimants? We will have to wait and see how the Courts deal with defendants ‘’windfall’’ concerns (but see Bottomley below).
It is possible that defendants could now look to Periodic Payment Orders (as opposed to traditional lump sum payments), as a means of retaining a check on the claimants future care funding. The law does permit the claimant and the defendant to seek a variation of a Periodic Payments Order (up or down) if there has been a defined change of circumstances. Whether the Courts would be prepared to use their powers of variation in the event of the claimant obtaining public funding, notwithstanding the fact that the PPO provides for private funding of care, is a moot point. Certainly, the Court would have to interpret the Damages (Variation of Periodical Payments) Order 2005 in a very generous way. Alternatively, a simple amendment to the Act could go some way of allaying defendant’s fears of double recovery.
It was proposed in Freeman
that the defendant could offer the claimant an indemnity so that if the local authority fails to continue to provide funding for care in the future the defendant would then provide these care costs. However, the defendant in Freeman
was unwilling to offer such an indemnity and it is perhaps unsurprising, given the potentially large cost of future care and how far into the future this indemnity could be requested. From a claimant’s point of view, this is not an ideal situation either as there is no guarantee that the defendant will be able to meet these costs in the future if, for example, the defendant’s insurer becomes insolvent.
In Nottinghamshire County Council v Bottomley (by her litigation friend Helen Ryan) and East Midlands Health Authority (2010) EWCA Civ 756, the Court of Appeal held that it was desirable for Nottingham County Council to be added as a party to the proceedings so that the Court could resolve the issues as to the amount and form of the award to be made to the claimant and whether and in what circumstances the council would propose to charge for its services. The issue of whether the judgment or settlement would take the form of a PPO or a lump sum was one on which the council was entitled to be heard.
Another potential issue arising from the Peters case
is that it does not deal specifically with the imposition of contributory negligence or discounts to reflect litigation risk. If this is the case, it inevitably means the claimant’s damages will be reduced and therefore any payment made by the defendant in respect of the claimant’s future care needs may not be sufficient and the claimant may still be forced to rely, at least in part, on publicly funded care.