Costs of future treatment in mesothelioma cases
A review of current practice in resolving claims for future treatment in mesothelioma cases and in particular immunotherapy and associated treatments.
We are here concerned only with the cost of future treatment for mesothelioma sufferers where liability is not in issue and where all other heads of claim have been resolved.
A Claimant will be entitled to recover such costs in accordance with the general rule that medical expenses are recoverable if they have been reasonably incurred or are likely to be reasonably incurred at some point in the future and the problem arises in ‘living’ claims against the background that immunotherapy may not yet have been commenced or even recommended at the time at which settlement is being considered; where life expectancy both with and without treatment is an unknown quantity; where the clinical picture and availability of treatments is fluid; where the Claimant’s likely response is unpredictable and where the costs associated with such treatment cannot be quantified.
There are ongoing developments in relation to attempts to treat mesothelioma, particularly with various types of immunotherapy. The benefits are as yet unclear, but Claimants with the disease may understandably wish to take advantage of treatments which might serve to alleviate symptoms or at least slow the progression of the disease. The Court at an assessment hearing will therefore be considerably hampered in making a final award and a Claimant will inevitably be over or under compensated. The management and settlement of ‘living’ claims therefore calls for more creative approaches and for structured agreements that would not be susceptible to being the subject of an order. Claimants who require such treatment will want to be assured that funding is readily available to match such treatment as may be recommended against the background that healthcare providers will usually require payments before treatment is administered and will not allow terms for payment at a later date. This means that if funds are not available upfront, the treatment will not proceed. Insurers on the other hand will reasonably want to minimise the risks of overpayment and retain some ability to scrutinise the nature and cost of some recommended treatments. It is possible to envisage circumstances where a blank cheque approach might lead to unwarranted increases in cost or to highly experimental forms of treatment being recommended both in the UK and possibly abroad that, whilst being of financial benefit to particular interest groups, might not be in the best interests of a particular Claimant. These ongoing tensions have led to much debate and some measure of resolution in the context of settlements achieved at JSMs.
We are aware the some Claimants have argued in favour of the Court making a Periodical Payment Order (PPO) to facilitate the provision of funds, but we are not aware to date of any Court determining that the approach of a standard PPO would be appropriate to meet the problem as opposed to what we will define for present purposes as a “hybrid PPO” (considered further below). There are difficulties with the concept of a standard PPO in this context. Not least:
- Sections 2, 2A and 4 of the Damages Act 1996, as amended, and CPR 41.8 have some mandatory requirements for a PPO;
- The annual amount to be awarded must be identified, as must the intervals of payment; CPR 41.8(1)(a);
- Where an amount is awarded for future medical costs is to increase or decrease on a certain date, the order must also specify: (a) the date on which the increase or decrease will take effect and (b) the amount of the increase or decrease at current value; CPR 41.8(3);
- AA v CC  EWHC 3679 (QB) confirms the Court will be unable to make orders starting and ending on uncertain dates;
- Whilst it is possible to vary a PPO pursuant to the Damages (Variation of Periodical Payments) Order 2005, by regulation 7 only one such application may be made.
A Claimant might nonetheless seek a standard PPO, with an annual amount to cover the possible costs of treatment(s). The obvious detriment to a Defendant is the likelihood of overpayment. That is liable to occur both if a margin of error over the cost has been allowed, and also given that whilst the date of death is an obvious end point for a PPO, at least the presently available known treatments are liable to be stopped well before that date. A Defendant has the reasonable argument that it should not be ordered to overpay either in terms of regular amount or relevant period, and will not wish to be put in the position of having to recoup overpayments from the estate, even if that were possible.
It seems to us that in most cases the most appropriate course that a Court might impose would be to adjourn this aspect of the assessment of damages, thereafter permitting applications for interim payments to fund treatment. This is something the Court could order, and which also has the advantage of not fixing levels of ongoing payments that may subsequently cease to be appropriate. From the insurers’ perspective it would also allow their input into any necessary assessment of the reasonableness of the further treatment for which funds are sought. For the same reason, Claimants may not prefer such an approach, which would permit greater scrutiny of any recommendations and which would be less flexible in terms of available cash flow. Such an arrangement would put the receipt of further costs for treatment somewhat at the mercy of listing arrangements and would not address the stated aims of Claimants in claims to date, namely to have access to funds as required for immunotherapy as recommended by their treating oncologists at whatever cost and with the freedom not to have to administer those funds directly. Such an arrangement would also give rise to the cost of repeated applications, particularly given that funding for a long projected period into the future risks overcompensation for reasons discussed above, and with no obvious mechanism for refunding any overpayments to the insurer.
The parties are of course able to devise agreements that could not be imposed on them by the Court. There are an increasing number of different variations of such agreements that have emerged so far in the course of settlement negotiations, although as far as we are aware, none has yet emerged as the standard. These include:
- The indemnity: in essence insurers agree to pay the invoices of the treatment provider. This has the attractions of simplicity and accuracy of compensation. Some Claimants prefer not to enter such an agreement, however, possibly on the basis that they are then reliant on the insurer paying the bills as promised and might have their treatment stopped (at least until they can return to Court), if for some reason payments are not made. There is also the issue of what to do about as yet unidentified treatment. Insurers may wish to reserve the ability to have input to assess the reasonableness of the same, and at least some Claimants have sought to resist such involvement;
- The “Scott” agreement. This type of agreement contemplates that regular payments should be made into a trust administered by the Claimant’s solicitors, to be allocated as payment for whatever treatment the Claimant is to undergo, provided this has been recommended by his or her treating physician, with top-ups/repayments as appropriate. Despite being widely touted by the Claimant’s representatives in that particular case, so far as we are aware, this form of agreement is limited in its applicability to that one occasion. Possible reasons for its lack of popularity with insurers include the requirement to pay the Claimant’s solicitors’ costs of the trust, and the lack of any opportunity to question and if necessary, challenge the reasonableness of ongoing or new lines of treatment.
- The “float” agreement. This type of agreement contemplates that Insurers pay into a trust fund administered by a third party and keeping it in funds so that there is a permanent float of money (only) to meet the ongoing cost of agreed treatment. In the event that insurers do not make particular payments, whether by design or error, the Claimant has a reserve to tide him over and to permit the continuation of treatment whilst the position is corrected and/or whilst waiting to bring the matter back to Court. A float agreement can also be set up to address the issue of how to determine the reasonableness of as yet unidentified future treatments. For example it can: deem certain named drugs to be reasonable; deem other drugs reasonable if they have demonstrated a benefit after Phase II trials, up to limited an annual cost; provide that treatment will be deemed reasonable if agreed as such by the parties’ oncologists; in the case of disputed reasonableness, provide for an expedited return to Court with funding and provision about clawback in the interim. Finally, there is no problem with potential overpayment because sums in the trust at death would be paid back to the insurer.
- The “hybrid PPO”. This type of agreement can involve provision for PPO type payments for current treatment, and the next line of anticipated treatment, with the parties having the facility to return to Court if need be in relation to the reasonableness and funding of other treatments. As with the “float” agreement, with payments being made to a third party trust, any sums not spent on treatment can be repaid. This is probably not a structure that would be susceptible to a Court order or within the jurisdiction for the Court to order, but is something the parties could agree upon.
We have recently been involved in settlements involving the latter two models. Both have the advantage to insurers that the third party trustee is a relatively inexpensive mechanism to ensure that only appropriate bills are met and that any surplus is repaid, and the reassurance that there is no blank cheque commitment to funding whatever may in the future be recommended to the Claimant. It is possible that in the future one type of agreement will gain universal or at least more popular acceptance, although one size will inevitably not fit all, and the facts of individual cases, and the personal preferences of the parties, will continue to mean that various different types of agreements, and different terms within them, will continue to proliferate. In the meantime it may be useful to be aware of the above approaches.