I welcome Dr. Michael Saunders, chief executive officer of the Medical Defence Union Limited, Dr. Christine Tomkins professional services director and Ms Mary-LouNesbitt head of governmental and external relations department. I wish to draw attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before it. I apologise for the absence of the Chairman. I invite the delegation to make its presentation.
Medical Defence Union Limited: Presentation.
Dr. Michael Saunders
I thank the committee for the invitation. We sent some papers, which I am sure were circulated. I will now make some general points. We feel there is ample evidence that there is an obstetric litigation crisis in Ireland. This is not a problem unique to Ireland but a problem which most, if not all, of the western developed medical countries are facing. There is a fixed cerebral palsy rate of between two to three per 1,000 live births, which means that in every 1,000 children born, two to three will have cerebral palsy of some form. They will not all have catastrophic injuries, but some will. Given the birth rate in Ireland, which is about 50,000 to 55,000 births per year, it is clear there are potentially 150 children born every year with cerebral palsy. This is not a reflection of the quality of obstetric care - Irish obstetricians are among the very best in western Europe. This is a fixed figure for all developed nations. Whether in American, British and French hospitals this is the fixed rate of cerebral palsy. With that number of cases it is the MDU's experience that approximately 20 to 30 cases will be litigated every year of which about eight will attract substantial damages currently running at between €3 million to €4 million each. This shows the scale of the cost of settling these cases.
It must be remembered that this is not exclusively about money - although money is a problem for the Medical Defence Union. This is about damaged babies and the care they require. For the eight or ten who manage to succeed in court and attract damages to provide for their future care, there is another substantial number, representing more than 90% of those born with injuries, who receive nothing.
An additional problem is that the cost of settling these claims has been rising at about 26% per year, which means the value is doubling every three years. If a case was settled for €1.5 million three years ago, a similar case will now settle for €3 million. A particular problem is that there is a long period between the incident, the birth of the child, and the claim coming forward in the courts, and also from the time the claim comes into the court to the time it is settled. On average the time between the incident and the settlement of the claim is about ten years. It is about four or five years before we know about the claims. A number of incidents have already happened about which our members, the doctors and the obstetricians, do not know there has been a claim, as it has not been reported to us. These claims come in years after the incident, by which time the value of these claims has risen substantially.
We became aware of this rising cost and increase in frequency of litigation for obstetricians through the 1990s and particularly through the late 1990s. I have been involved in detailed discussions with Department officials over that time. They say this is our fault for not having charged enough by way of subscriptions at the time. It is true: we did not charge enough money. However, my response is that nobody knew how much money was required and it was not possible to charge the right amount. In our submission there are some examples of what we now know the rates would have been set against the earnings of obstetricians at that time. It was not possible for us to know.
When it became increasingly clear that there was a problem and we were in discussions with the Department officials, I believed this problem would be resolved with the advent of the clinical indemnity scheme based on enterprise liability. However that has not proved to be the case. It became clear to us come time ago that we should now charge an effective rate. When we did charge that rate which was considerably more than €400,000 per obstetrician, the State moved to block that subscription and entered into what at the time were secret arrangements with our competitors in respect of cases going forward. To the allegation that we did not charge enough money, it is true. When we tried to charge enough money we were blocked by the Department by an arrangement secret even from the obstetricians themselves, which picked up the cases going forward.
In current prices we estimate that arrangement is the equivalent of a €50 million subsidy for cases going forward. Both public cases and those which are exclusively private will attract this subsidy. That deal has created two classes of litigant, those going forward are protected by the certainty that the State will ultimately pick up the costs of the litigation and those cases in the past and those known to be in the pipeline - a lot of cases which are yet to come, called the IBNR in the jargon - incurred cases not yet reported. The historical liabilities are not subject to those certainties. There are now two cases of babies: those who can if they are successful be guaranteed reimbursement from the State and those who are before the start-up line and have no such guarantee.
Equally there are two classes of doctors. We have the obstetricians who going forward are immune from the consequences of rising litigation and the cases from the past which are meant to fall on the backs of the other consultants who, if we did not act in the way that we have proposed, would have to pick up the cost for the obstetricians from the past as they become known. The State stopped us from raising the right subscription.
There has always been an element of "pay as you go" in the subscriptions. Our competitors drew attention to this in their annual report as recently as two years ago. It has always been true that the only way to make up the shortfall from the past, if and when it became clear, was by raising the current subscriptions to top up from the past. It must also be remembered that courts change things like discount rates, which are to do with the value of money over time, so that different assumptions are made so that there are increases in the costs associated with settling cases, which is quite a proper activity. However it retrospectively means that more money is required. It must be taken from current cashflow.
In a mutual, if one group requires more money all the others should pay for it. That is a somewhat interesting concept of mutuality. Mutuality certainly means the risks are spread among the other doctors. My colleague, Dr. Tomkins will give some figures at the end. The obstetricians in Ireland have received a subsidy from the other members of the MDU for the past 20 years. While we are dealing with figures, it is a fact that the Irish doctors have received a subsidy from the other members of the MDU over the past 20 years. If we think in terms of Peter and Paul, if Paul borrows money in the name of mutuality from Peter, there comes a time when Peter wants his money. Mutuality does not mean that one group can be allowed to bleed the others perpetually.
There is an obstetric litigation crisis. If the MDU did not act to stem this it would progressively burden the other members of the MDU to a point at which they can no longer afford it. It will eat up all the funds which the other Irish doctors have subscribed for their benefits. The board of management of the MDU has a duty to all the members of the MDU - the totality of the membership - which is why we wrote in the terms we did recently that we may be faced with exercising our discretion so that we do not assist in certain cases.
The State has recognised that the obstetricians represent a special case. It has done this prospectively. It is our suggestion that it should now deal with it retrospectively so that there are not these two classes of patients and doctors. The past should be dealt with. We are talking about public cases of Irish children in Irish public hospitals who are in need of compensation. We seek an orderly transition to the new situation that is envisaged with the clinical indemnity scheme and this should be achievable.
Dr. Christine Tomkins
I will provide some figures in support of the general points that Dr. Saunders made. As members have heard, we have not taken enough money from the obstetricians. There are still new cases being reported to us relating to babies born as far back as 1980. Even if it had been possible at that time to say the subscription for cases incurred in 1980 should have been £20,000, it would not have been possible for the doctors and obstetricians to pay that sum. For example, in 1980 an obstetrician would have been earning about £10,000 and his subscription to the MDU at the time would have been about £100. As we now know because of the occurrence nature of the indemnity, that is, that babies born in 1980 are bringing claims now in 2003, the subscription we should have taken in 1980 would have been £21,000. It is evident that that would not have been possible.
I will give an idea of the sort of discrepancy between the sums taken from the obstetricians and that which has been and will be spent. We have taken about €25 million from obstetricians in Ireland since 1977. We have paid obstetric claims of €62 million and we have an estimated future liability for the known and the incurred but not reported claims of €130 million plus the legal costs.
I presume the MDU has had meetings with the Department on this matter. Has the Department closed the door completely? Is it taking on any of the liability? What is its argument? If past claims are to be paid out of current revenue, as is the normal practice, how does the Department suggest this problem can be dealt with? Does it envisage any solution?
Dr. Saunders
We have had umpteen meetings with the Department in the past ten years. I first called on the Department to discuss rates and trends in 1991. Certainly in the past five years there have been very regular meetings. So there has been a lot of discussion. The Department is fully aware of the problem. Its officials have seen all the figures. They have seen the cash flow figures. Twice they have had access to our full actuarial data to assist them with the proposals to do with the clinical indemnity scheme. They are well aware of the facts and they have never challenged the statements, which I made today, that this is a doubling in the frequencies and costs.
In the past year we have had regular meetings with them to see if there was a way of dealing with this. The last thing we had was a letter from the Department saying that effectively the officials were no longer interested in talking with us. There were no proposals that were at all attractive to them from us. What they meant by that was that if we were prepared to put up the money to meet all these claims, then of course the State would assume responsibility for them. If we had the money to meet these claims we would not be having these discussions.
I apologise for being late. This shows a terrible neglect of litigation in the area of obstetrics on the part of the State. It is not fair on people going to court, the medical profession or the insurers that this whole area has not been dealt with in some reasonable fashion so that people can have a chance to get some kind of compensation when these things happen to avoid the necessity of hugely costly court actions with huge payouts that do not necessarily resolve problems particularly for people who do not get the payouts. There have been incidents of families who have been really badly affected. There is a general context that must be addressed by the Government and it is important that we make that case to the Minister.
I am curious about the deal done by the Department and the MPS. This was extraordinary in that it was done in secret - even the obstetricians were not aware of it. I believe MDU has challenged this at European level. I would be interested to know whether this is considered normal practice under EU law or whether it is considered to be very unusual. Does it comply with European law?
Dr. Tomkins
We looked into this matter when we learnt the details of the arrangement with the MPS, which we got through the Freedom of Information Act about one year after the initial deal was arrived at. We were advised that we had grounds for a complaint to the competition authorities and we have made such a complaint. However, the wheels in Europe move slowly and there has been little progress on that so far.
Is Dr. Tomkins referring to the competition authority here or in Europe?
Dr. Tomkins
In Europe.
What about the Competition Authority here?
Dr. Tomkins
We have not raised it with the Competition Authority here. We were advised that the proper place to raise this was in Europe and we have done so. Our objective here is not particularly to complain about the arrangements but rather to have a public debate about the whole problem. As the Deputy rightly says, complaining to the competition authorities does little to address the underlying difficulty here, which is a problem with the tort system and the very unfair way in which 150 babies with cerebral palsy have equally pressing needs. Only a few may sue and only a few of those will succeed. The real problem is the need to provide them with care. This is a problem not just for the obstetricians but for society.
I thank members of MDU for their professional and straightforward presentation. As they have said the terrible reality is that 90% of the people receive nothing. People feel they need to win the Lotto to get anything for a child so affected by whatever cause. The only way to get anything is by proving somebody was at fault. If I can be excused the pun, it is the fault system that is at fault in this. If we had a system people could understand they would get something at least to help them cope with the disabilities of the person. Because of the uncertainty surrounding this nobody knows. While at the time MDU felt it was taking an adequate premium, nobody could have predicted the explosion that occurred.
In the absence of a fairer system we have to deal with the one we have. This is part of the price we are paying for that. We just cannot estimate the number of claims. In Ireland we have not been slow in taking people to task for perceived wrongs. The difficulty is that it is now an adversarial system that depends on the amount of clout people can afford to pay for. It is a contest between lawyers who, as usual, seem to make so much out of all this. The lawyers' fees can represent up to half the total award, which is disgraceful. It is the taxpayer and those with disabilities who are paying for all that. This matter needs to be addressed.
When I was getting indemnity insurance it was my understanding that I would be covered for a claim even if it arose after my retirement. This must have been the understanding of my colleagues, the consultants and the Department. They believed people would be covered for historical liabilities. In other words, as long as there was a claim there would be cover. However, it now seems that MDU is exercising discretion. Has it exercised this discretion and, if so, how many consultants has it refused to cover?
I believe MDU has already answered my second question, which was whether it had sufficient funds to cover its liabilities. Apparently it does not. Is that the reason the Medical Defence Union is now threatening not to cover the consultants? That would appear to be the case. Does that not involve reneging on the union's contractual obligation to its members? Finally, what is Dr. Saunders's view with regard to patients who will not be in a position to obtain redress as a result of this situation? Recognising that the system is unfair, it is still the only system available to people to secure redress.
I will take two more questions.
I welcome the deputation. I hope Dr. Tomkins will recover quickly from her injuries. The situation we are dealing with is a difficult one. I wish to put a few questions to the deputation. First, does the MDU consider it has a moral obligation to honour a commitment which was entered into in good faith two, three or four years ago and on which the union now appears to be reneging? If one makes an agreement at a particular point in time but subsequently feels unable to honour it, I believe there is certainly a problem in that regard. Second, as Dr. Saunders mentioned in his introduction, while it would have been difficult to calculate in 1990 what the future claims liability would be, is it not reasonable to suggest that the fault for that rests with the MDU? It was that organisation which entered into a contract with the consultants.
Obviously part of the escalating cost as a result of taking the legal route is attributable to the huge increase in costs involved in having three, four or five legal teams representing consultants and others involved in claims. The State, through the Department of Health and Children, has set up the State claims agency, which has been very robust in defending its position. Why was the MDU not as robust at times? Going back a number of years, I have to declare that I was a member of the MDU when all members paid the same rate. It became very apparent at a certain stage that those of us who were in general practice felt we were carrying other members. This was pointed out to both protection societies and, eventually, a group of general practitioners left the MDU and founded their own defence organisation. We were subsequently proven right, in that the rates paid by general practitioners were - and are - much less than other members of the profession, such as obstetricians. I would appreciate some answers to those questions.
I, too, was once a member of the MDU and I am now a member of the new GP indemnity organisation.
I wish to declare that I have been a member of the MDU for many years. I am also a member of a small group which the MDU describes as its Irish advisory committee. If I may pick up on a comment by Deputy Devins, it is quite true that some of us who were in low risk areas considered that we were subsidising those in high risk areas and this changed subsequently. However, in the case of the general practitioners who are now involved in their own insurance scheme, the rates have doubled within the last few years. That is what happens when the claims start to come in - and the rates may double once again in a very short time.
The pressing issue is the fact that the MDU did not get any opportunity to tender alongside the Medical Protection Society for this deal which was done secretly by the Department of Health and Children. It is very hard to explain the reason for this. The Department must have known that some patients would be left in a serious position, namely, those who were not insured with the Medical Protection Society. It is extremely difficult to understand the reason the Department subsidised one medical scheme only - admittedly a good scheme. I believe it should have looked at both schemes under which obstetricians were insured in this country. That is really what has caused the present difficulty, as well as the fact that the no-fault compensation scheme has not been brought into operation. The reality is that the vast majority of parents of children with cerebral palsy cannot prove there was any wrongdoing at the time of birth. Those are the people who have a real problem.
I invite Dr. Saunders to reply.
Dr. Saunders
I will do my best. Perhaps the Chairman will remind me if I miss any question. The first question related to discretion and insurance. The MDU is a discretionary mutual society - it is not an insurance company. That fact is made clear to the members on all application forms and educational material, it is written in our journal and even at the foot of our notepaper. The significance of that is that there is no right to an indemnity. There is only a right to seek an indemnity but it is not just an indemnity because we help our members before the Irish Medical Council and in relevant inquiries. It is a right to seek assistance and to have that request fairly, properly and non-capriciously decided by the board of management in its absolute discretion. That is a fact.
If, over the years, doctors thought they were insured - I note there has been a lot of sloppy talk in publications in some areas about "premiums" rather than subscriptions and about "cover" rather than benefits of membership - I can say quite categorically that, in the last 17 years, we have always endeavoured to speak of benefits of membership and subscriptions. We have shied away from using insurance terms until we did issue insurance, which happened in Ireland in 2001, I believe, through Eagle Star. If doctors were confused I understand that, but I do not accept that we have misled anybody or sold insurance under the guise of discretion - it is a discretionary mutual.
There is no doubt that the Department knew this was a discretionary activity, both on our part and that of our long-term competitors. The GP scheme referred to has, of course, an insurance element - the Medisec scheme. However, until Medisec came along - it was in the market in Ireland on a transient basis for a few years - we and the society were both entirely discretionary organisations. The Department knew that and, indeed, the official dealing with this area of business said so in evidence in a case in the High Court recently in Ireland. It is quite clear from the transcript of that evidence that the Department knew it was not subsidising or dealing with insurance companies and that this was a discretionary activity. It cannot be said that people thought they were buying insurance.
Clearly the moral of the story is that one should read the small print.
Dr. Saunders
I do not accept that it is small print. I will happily send the Deputy a selection of our material, on which he can decide. Of course, we are dealing with doctors, as one of whom I believe we have a certain intelligence. One is expected to read what one is buying and doing. I do not accept that it was small print.
I know the MDU is a very professional organisation which deals with professionals. Perhaps doctors may have assumed too much, if one is to judge from Dr. Saunders's comments. Doctors simply wish to get on with their job of trying to help people, on the assumption that they are dealing with a professional organisation and that logical assumptions would be fulfilled. It is regrettable that is not the case.
Dr. Saunders
The Deputy is quite right. I believe that is what most doctors have assumed. They took it that as their company, being a mutual, we would do our level best, as we have done and, as I have explained, we have sustained substantial losses in so doing. There comes a time when the interests of all of the members must come first. I believe we fulfil our contractual obligations to give proper consideration to requests for assistance. Of course, as we stated in our submission, we believe that, going forward, a discretionary system for indemnity purposes should not be dependent on discretion but should be a contractual right for doctors and, by implication, for patients. That is the reason we issue an Eagle Star policy in Ireland, which is written in plain English. Again, I will happily send copies to Deputy Cowley. The document makes it quite clear that, for claims of clinical negligence, there is a contractual right to an indemnity. The MDU is the only medical defence organisation in the UK and Ireland which believes that and issues policies for its members. Our position is the same in the UK and Ireland.
It was stated - by whom I do not recall - that patients could be left without any redress. What we have said - and I sincerely hope we will not have to do this - is that if the Department will not reopen negotiations with us to address this matter in an orderly and proper fashion, we are looking at public cases against public hospitals. In almost all of those cases, the claim is brought against the hospital and the medical staff involved. The hospital concerned has a vicarious liability for its employed staff.
The Taoiseach's order of 18 February, which gave legality to the State Claims Agency dealing with the claims brought against junior doctors and non-consultant hospital doctors and allowed them to act on behalf of the public institutions, allows the agency, at the discretion of the Minister and the Minister for Finance, to pick up past cases. I do not believe that was a mistake. I believe it was put in deliberately to give the State the ability to deal with these matters. Accordingly, public patients in the current system, which I agree is not perfect, have a right to redress against an institution which is vicariously liable for the medical staff. I do not believe they would fail to recover in those circumstances. Whether the Department would then go on to recover from its own staff is another matter. Such case-by-case legal battles will only benefit lawyers - I agree with the Deputy's comments in that regard.
Do we have a moral obligation? We have put tens of millions of euro into our moral obligation to support our members. However, it has to be borne in mind that the board is obliged to look after all of our members and there is a limit to the amount other members can be asked to pay towards obstetric claims in Ireland. If I may, I will skip to the last point made as to how GPs in Ireland were subsidising their hospital colleagues. It is true that, on a truly mutual rate which, for many years, both organisations applied until that changed in 1990 for economic reasons, GPs were almost certainly subsidising their hospital colleagues.
One can debate the rights and wrongs of that. However, if I was in general practice and sent a patient to hospital a little late, or not as well prepared as possible, with the result that the consultant was left with a disastrous situation in which I had played some part, even though it was not claimed against me, one could say it was right that my subscription was contributing to his. That is the argument in favour of it. However, there is no doubt, as Deputies have pointed out, that GPs did not like doing so. They wished to pay only for their own risk.
That further reduces the ability of an organisation such as ours to load the subscriptions of one sector to pay for the obstetricians in Ireland. The obstetricians in Ireland have to stand up for themselves and be counted, but they cannot afford to be counted on the basis of the figures I have given. That supports our argument that this is a special area. The secret deal shows that the State already recognises that obstetricians are a special case. However, that is in the context of going forward, not dealing with the past. This is a special, particular area.
With regard to claims liabilities and the suggestion that the fault rests with us for not charging more, when we knew we should charge more I confess that my anxieties were soothed for a while by discussions which I thought were leading somewhere with the Department. I now know I was wrong to rely on what I thought was goodwill, on the basis that this would be addressed with the advent of the clinical indemnity scheme. If that is fault, I accept it, but that is the reason it took a number of years to push up the rates up for obstetricians - I thought we were going somewhere in discussions with senior civil servants.
As to the suggestion that we have not been sufficiently robust with regard to legal costs, the Deputy does not have the facts. It is very difficult to extract figures for Irish legal costs from accounts. I can inform the committee that our legal costs amount to about 20%——
Dr. Tomkins
Approximately 20%.
Dr. Saunders
——of the settlement value of cases. That is below the going rate for commercial firms. It is certainly well below the going rate for the claimant, the patient's costs, as a proportion. It will remain to be seen as to whether the State Claims Agency can match and improve on our legal costs. I believe there is a good chance of that. I know some of the people in the State Claims Agency and they are excellent claims handlers. There will be some savings by the State Claims Agency because, as has been pointed out, there will not be two or three parties to a claim and that must produce a saving.
However, I do not accept that we have been tardy in controlling our own costs. I am very proud of the costs of the MDU as a percentage of the subscriptions taken, at about 12% or13%. Averages in insurance companies, if I may refer to them, would be 25% to 30%. Accordingly, I believe we in the MDU run a very efficient company. I hope that answers all questions, Chairman.
I have just one question before I have to leave - I am speaking in the House shortly. Dr. Saunders said that the State precipitated this crisis. It is probably true to say the State precipitated and exacerbated it. Perhaps, in trying to solve one problem, another problem was created. If that is the case, what is the view of the obstetricians? While I have heard from the MDU a number of times, I have never heard from any of the obstetricians. Are they concerned that they do not have cover, if I may be excused for using an insurance term?
I acknowledge that some claims may not come forward until 20 years later and that, in some cases, the medical people concerned may have retired or passed on. However, I expect that many of them are still working and if they are working for the State, they would appear to have some leverage over the State. How are they expressing their concern - or are they expressing it?
Dr. Saunders
It is an interesting situation. If I recall correctly, I have had four letters from former members of the MDU following our letter to them. I believe one was from a member in retirement, a situation in which I agree one has particular sympathy having regard to the absence of the relationship with former employers. That may be a factor which might influence the board if it has to exercise its discretion. I cannot say it will, because I cannot fetter the discretion of the board. All factors will be considered at the time. I believe those who are in employment are sitting tight because they see the logic of the argument that these are public cases for which the State is vicariously liable. If they are persuaded to challenge the discretionary activity of the MDU, there appears to be some indication from the press that the Government would support them in that regard. Perhaps they feel that if they sit tight, it will be all right. I sincerely hope that will be the case for them, but it is not the proper way to conduct this matter.
I am greatly confused. While I have had no occasion to come in contact with the MDU, I would have expected it to operate as an insurance company. My confusion arises from the statement that the MDU is not an insurance company, the reference to the right to seek an indemnity - I believe that was the term used - and the discretionary aspect. Earlier, Dr. Saunders seemed to say that the MDU is now actually asking the State to cover its insurance liabilities, while absolving itself of those requirements.
With regard to the figures presented by Dr. Saunders, I agree with Deputy Devins's comment that one should honour a contract entered into. It may be unfortunate that circumstances do not permit one to honour it in the way one would like. The statistics quoted by Dr. Saunders indicated that 100 to 150 births per annum could result in cerebral palsy to some degree and that 90% of those with a potential claim do not receive any money anyhow. One is dealing with only ten out of 100, very few cases. I recognise that the Medical Defence Union's primary responsibility may not be to the patient or to the person who has suffered, but to its members. I ask the MDU to tell me if I am being a little harsh. It seems that it is asking the Government to pick up the bill for its shortcomings. In essence, it is looking to serve the interests of its members rather than the patients. If I may say so, the responsibility of the State is to the patient and not necessarily to the medical practitioner. Perhaps I am being harsh - Dr. Saunders can tell me if I am.
Dr. Saunders
The question is perfectly reasonable and fair. The Deputy is right to state that the MDU has an obligation to the totality of its members. We have to act in the interests of the organisation as a whole rather than any specific sector. This is an obligation which is laid on the directors of any company. We are saying that the interests of the entire company may militate against the expectations of a tiny group. The board of the MDU has examined a range of possibilities for dealing with this as part of the process of reaching this stage. It has received financial and legal advice about the rights and wrongs and the likely commercial consequences of a range of actions. The obstetricians are facing this possible exercise of discretion at the moment.
All of this was done on a discretionary basis historically until an insurance policy was introduced as part of what a member receives from the MDU. This harks back to the foundation of the union in 1885, which was the first medical defence organisation in the world. Professional associations such as trade unions provide assistance to their members to this day on the basis of discretion. They do not have solvency margins, they are not subject to regulation by the IFSRA and they do not have to produce returns and actuarial reports because they are not insurance companies. They pay their members, or do not pay them, and they help their members, or do not do so, at their discretion. This concept is alive and well in many Irish organisations. We decided in 2001 that this was no longer the right manner in which to proceed. We issued policies to members in Ireland as part of this package.
The Deputy asked if we should have known. We started to realise that this was taking off at a certain stage. The graph shows an increase in obstetric rates from about 1996 or 1997. I was reassured by the discussions I had with the Department, but I now know I was wrong to be reassured. I cannot produce a piece of paper signed by the Department saying that it would be addressed. My interpretation of the discussions was that the Department genuinely intended to deal with this matter when the clinical indemnity scheme - enterprise liability - was introduced. I was wrong.
I welcome the delegation and thank it for its presentation. Does the Medical Defence Union envisage that this could happen in another specialty of medicine? Is there a risk that other consultants who were involved in a multi-disciplinary team with obstetrics could be involved in claims? May I ask about the MPS which is competing with the MDU? Was the MPS in the same position as the MDU in the 1990s when the union suddenly discovered that it could not indemnify the specialty of obstetrics? Was the MPS saying the same things as the MDU at that time? Was it pulling away from that part of the market?
I should declare an interest at the outset. I am a member of the MDU and have been for many years. I ask Dr. Saunders to pretend that I am an obstetrician who has transferred from the MDU to the MPS. If an action is taken against me for professional negligence which is said to have taken place while I was a member of the MDU, who will defend me? Will the MPS or the MDU defend me? What is the position of the MDU in such circumstances?
Dr. Saunders
I was asked if this could happen in respect of other specialties. Of course it could happen to other groups. It is perfectly possible, going forward, that other specialties will produce claims that mean that they cannot afford to subscribe enough for their continuing indemnity. If the policy rate climbs and climbs on an insured basis - one is insured year by year - until one can no longer pay it, one will have a stark choice. It may be that one's practice will not be indemnified, meaning that one will no longer be able to practise and one will have to take up another specialty, or one will have to negotiate another way of doing it. It is certainly possible. We know that some areas produce quite remarkable frequencies of claim. Some plastic surgery activities produce quite extraordinary rates of litigation. I will be happy to tell the committee why that is and how it is dealt with. It is possible.
Are we inquiring into that now? Will plastic surgeons, for example, end up in the same position as the obstetricians at present? Is the MDU safeguarding against that now?
Dr. Saunders
It is not possible to insure neurosurgery in Ireland, just as it is not possible to insure obstetrics. No insurance company will underwrite the risk. It has already happened in that sense. We are still accepting neurosurgeons as members, but at a very high subscription rate. This is not insurance, as they know full well, but a discretionary activity. The right way to deal with the matter in the long-term is to have a totally insured system and not to have a discretionary element. There certainly should not be a discretionary element in terms of what happens if one leaves the specialty or if one retires. In such circumstances, there should be a run-off policy which covers one in retirement. This comes at a cost however. It will be much the same cost in absolute terms over a lifetime - it is a restructuring of the finances.
If one examines doctors' insurance companies in the United States, one will see that the sort of scheme that works perfectly well there involves insuring year by year on claims made while loading the premium slightly over 10, 15 or 20 years so that if members leave they get an insurance policy that covers them for the rest of their lives - upon retirement, disability or death. I make no bones about saying that the MDU would like to change to such a scheme in Ireland and the UK. It is a contractual indemnity which is subject to regulation.
There is a vote in the Dáil, so I will have to suspend proceedings for about 15 minutes.
Sitting suspended at 10.40 a.m. and resumed at 10.55 a.m.
I convey the apologies of members who cannot return to the meeting due to other commitments. We will wind up by taking some last questions. Does Dr. Saunders wish to add anything before conclude?
Dr. Saunders
I was asked about the position of our competitors, the Medical Protection Society. No doubt the society will be asked to speak for itself. This company has had broadly the same exposure in terms of numbers of members and period of operation in Ireland. The level of claims it faces is broadly similar to ours. As has been pointed out, in many cases our companies share members and we are involved together in settling claims. There has never been any suggestion or evidence that MDU cases are settled more expensively or at higher levels than those of our competitors. In fact, our costs are very respectable in the industry. Despite this, the society is able to say, having consistently charged less than us in all areas, that sufficient funds were raised.
Before the secret agreement was known, the society's chief executive said he did not understand how I had calculated my figures. As we know, he said that with the benefit of a €50 million State subsidy per annum. Originally, that agreement applied only to transferring MDU members. We know from documents released under freedom of information rules that the true rate was not what was being charged. It was, in fact, well over €200,000. The documents were referred to in the presentation we submitted to the committee. This prompted the State to extend the special arrangements to all other members of the MPS, both public and private practitioners. There are some very interesting questions raised by this.
We must also bear in mind that, like us, the society acknowledges the problems with the current subscriptions. In its annual report the society said the long interlude between an incident and settlement permits one to adjust subscriptions into the future to pay for the past. I do not criticise that statement. What it outlines is exactly what the MDU has been doing for generations. It is the only way to make the system work when there are retrospective claims increases. I agree also with the society's statement that, in the long-term, each state must raise enough money to cover its own liabilities. This is another way of saying it is not possible to continue to provide a long-term subsidy from other states in the organisations. In the MDU's case now there is only the UK and Ireland. We only operate in these islands whereas our competitors are still multinational. There are some very interesting questions to put to our competitors.
At the moment, if a member transfers from the MDU to another organisation or ceases to practise medicine, he or she retains the right to seek assistance, though not to receive it, in respect of an incident which occurred in the years in which a subscription was paid. The precise example raised by a committee member involved an obstetrician who has changed to one of our competitors. If an instance arises from the time he or she was with us, he or she could ask us for assistance.
I thank Dr. Saunders for his presentation. I hope it stimulates debate and that we will find a fair and equitable solution. I also hope negotiations with the Department can be reopened. I thank Dr. Saunders for travelling here.
Dr. Saunders
I wish to emphasise that this problem is not the MDU's fault or the fault of the obstetrician or, for that matter, the patient. These are facts in respect of the cerebral palsy rate. The system is adversarial and this is the situation in which we find ourselves. Only the State can deal with all the issues in terms of courts' operations, the levels of claims and the possible care alternatives for children with cerebral palsy. We are just the messengers. I understand that the message is not palatable and that historically there is a high death rate among messengers. This is not a problem of our making.
I hope that in this case the messenger will not be shot.
Dr. Saunders
Thank you very much.
The joint committee adjourned at 11.05 a.m. until 9.30 a.m. on Thursday, 27 November 2003.