Representatives of the Irish Hospital Consultants Association will make a presentation on medical litigation issues and proposed changes to the hospital consultants' contract. I welcome Mr. Finbarr Fitzpatrick, secretary general, Dr. Josh Keaveny, president, and Professor Michael O'Keefe, Dr. John Clarke and Dr. Eamonn Carmody of the IHCA. I advise the delegation that while committee members have absolute privilege, this same privilege does not apply to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
Medical Litigation: Presentations.
Dr. Josh Keaveny
I thank the committee for the opportunity to appear before it. My colleague, Mr. Finbarr Fitzpatrick, will make a brief presentation, after which the delegation will answer members' questions.
Mr. Finbarr Fitzpatrick
I intend to concentrate on pages 1 to 3 of the document, which has been circulated to the committee, and to refer to some items from the appendices. The immediate problem for the IHCA is that hospital consultants who are members or former members of the Medical Defence Union are not protected or indemnified for historic liabilities, that is, claims arising from the past. In recent months, the MDU has refused to assist at least 11 of its members. The decision of 1 February 2004 by the former Minister for Health and Children, Deputy Martin, to impose the new clinical indemnity scheme, which provides insurance cover for consultants in public hospitals, has caused significant difficulty. It was a breach of the consultants' contract which states that any new form of indemnifying consultants would be by way of agreement between the Department of Health and Children and the representative organisations. The method by which consultants had been indemnified for their public appointments up until 1 February had been there for almost a century.
A great deal of uncertainty existed regarding the details of the provision of the scheme. Most of the scheme covered situations inside the gate of the public hospital, but there were some exceptions. For example, Good Samaritan acts, where a consultant would assist a person on the side of the street, were not covered. Neither were coroners' inquests. Some of the issues have been clarified since, but there was a great deal of uncertainty about the lines of demarcation. There was also uncertainty about the line of demarcation between the public and private sectors. In addition, the problem of indemnity for historical liability, namely claims arising from the past, had not been sorted with particular reference to the MDU. Furthermore, the impact of the new State scheme on the private sector had not been thought through. While the scheme does not cover the private sector, it must be remembered that approximately 12% of the overall cohort of patients in any given year are treated in the private sector, in fully privately-owned hospitals.
On 1 February 2004, the association had accepted the new State scheme would be implemented. Our debate with the Minister, the Department and the medical defence organisations was on the detail of the scheme rather than on the principle as to whether it should be introduced. In 2001 the MDU increased subscriptions for consultant obstetricians from IR£68,000 to IR£393,000, which is €499,000. This led to a crisis for the 35 consultant obstetricians who are members of the MDU. They could not fund that sort of annual subscription. As a result, they moved to the Medical Protection Society. The MDU introduced an insurance policy for all of the consultants, in co-operation with Zurich International and Eagle Star.
At various stages during the 1990s the MDU informed the Department of Health and Children that it had difficulty meeting obstetric claims. While we would often be critical of the MDU, we must be critical of the Department of Health and Children in this instance. Unlike us, it knew the detail of the difficulties with the MDU from the 1990s. It seemed the Department would do something, but it did not. The problem should have been resolved by 1 February 2004 in a similar manner to the resolution reached in the UK in 1989-90, when the State scheme, Crown Indemnity, was introduced into the public sector.
Negotiations between the Department of Health and Children and the MDU were intermittent during 2003. We estimate that they met on three or four occasions, whereas meetings have taken place on a much more regular basis in 2004. There have been between 12 and 14 meetings since 1 February. There has been Cabinet approval in principle for the Department to negotiate a package with the MDU, however progress has been slow and at this time we do not see a resolution in sight.
In a presentation to this committee last November, the MDU stated, on page 13, that it was "looking at public cases against public hospitals". The MDU had also stated to us that it "may" — I think that was the word used — refuse indemnity to a consultant obstetrician for a public case. The MDU also claimed that historic obstetric liabilities are the responsibility of the Irish State. We find this totally unacceptable. What have people been paying for over the years? Members of our delegation paid IR£68,000 in 1999 and 2000 for membership of the MDU. They did not pay to be a member of a club which did not give any benefit. We take serious issue with that statement and policy, and with any statement that says the MDU does not have any liabilities in respect of obstetric claims.
In recent months the MDU has refused assistance to at least 11 consultants. Three obstetricians with public appointments, working in public hospitals, have been refused assistance. Two obstetricians who have retired have also been refused. Three other obstetricians who practise exclusively in the private sector have been refused. Three consultants, who are not obstetricians have been referred to the State Claims Agency. We do not take issue with the State Claims Agency which is going to turn down their request for assistance.
I emphasise that although we are discussing consultants we must remember that there are patients suing them. Those patients, if given an award in court, are entitled to compensation. The consultant will be denied legal representation, but the patient will be denied compensation.
We reported at our annual conference last year that from October 2003 to October 2004 we held approximately 89 meetings with regard to the clinical indemnity scheme. It has dominated our agenda over the past 12 months. We met with the Minister for Health and Children and his officials many times.
The association reacted to the breach of contract, on 1 February 2004, by deciding at an extraordinary general meeting attended by 500 members to embark on a campaign of action. This was a change of policy on the part of the association which was formed in 1989, whereby we would not take industrial action. However, the fear of being uncovered, unindemnified and uninsured, as people might say, frightened consultants. Although only a relatively small number have been turned down to date, everybody who is a member of the MDU has the fear that a case will arise from their past, and that the organisation which has been there for a century and a quarter to defend and assist them will turn them down and leave them exposed. That put a degree of fright into consultants and resulted in a campaign of action being decided on in February.
On 18 February we were invited to a meeting with the then Minister for Health and Children, Deputy Martin. He asked us to defer our campaign of action for four weeks until we reached a solution with the MDU and tied up the odds and ends in respect of the medical indemnity scheme. We said we would do so, but we would retain our ban on certain meetings, in particular those dealing with the second Hanly report, the European working time directive and contract negotiations. That was seven months ago, and the negotiations which the Minister gave us to understand would be completed in four weeks have not been completed. Despite giving that commitment, it is not entirely the Minister's fault. We place a significant portion of the blame on the doorstep of the MDU.
With regard to an immediate solution, we requested of the Department and the Minister that those consultants who have been turned down by the MDU will be indemnified by the State and that the State should cover the awards of patients who would have expected to have an award as per court action. We were given a commitment to this effect in July 2003. We were also told that a memorandum would come from a Cabinet meeting in early September 2003, stating that no patient will go uncovered and no doctor will go undefended. The Department backed away from that.
This year, the former Minister made similar statements to us on many occasions and gave us to understand on Tuesday, 28 September, that it was his intention to have that proposal brought to Cabinet on Wednesday, 29 September. That meeting was deferred because of the Cabinet reshuffle, but he said to us that it would be put to the Cabinet on 5 October. However, the former Minister made that statement in the knowledge that there was a good chance that there would be a change of Minister. The proposal was not on the agenda for 5 October.
The Department may well take a case against the MDU for its failure to indemnify its members or former members. If it does so we will co-operate fully with it. A number of outstanding items regarding the clinical indemnity scheme need to be resolved and this can be achieved relatively easily. It should be done by Christmas at the latest.
Negotiations between the Department and the MDU should continue. It is likely that the Department will assist the union in meeting its claims from past obstetric liabilities. A considerable amount of Irish taxpayers' money will go to the benefit of the union in doing so. The Department has stated that one condition of any such agreement — I understand this was part of the Cabinet decision — is that due diligence be exercised regarding the union. Therefore, the Department would be satisfied that if it assisted the union regarding past obstetric claims, the union could, as it claims, meet all other claims, including the known obstetric liabilities and liabilities from all other specialities. We want to make it absolutely clear that we fully support the Department in that policy. We do not want a handout given for obstetrics today if the recipients come back in three years stating they have a problem with neurosurgery. This is another area subject to high levels of litigation.
Consider the following extract from a press release on the MDU's annual report of 2000: "The Medical Defence Union's Annual Report, out today, revealed that it paid out €78 million in compensation costs last year and it is in its strongest financial state for the last 50 years." We find it hard to accept that an organisation can say it is in its strongest financial state for the last 50 years and yet not come to the assistance of its members who have paid into it. Dr. Saunders stated the following in the same press release:
The very reassuring result of our strategy is that the MDU has access, should it be needed, to nearly £300 million [sterling] in reinsurance support over and above our existing assets. Members can be confident of the financial strength of the MDU.
If this is the case, why are 11 people, at a minimum, being hung out to dry at present along with the patients who are suing them?
Let me draw particular attention to the MDU's submission to the House of Lords in 1998. There is a contrast between this and the following statement made to this committee last November:
In setting subscription rates the MDU balances the need for enough funds to meet claims while charging members at the lowest possible subscription rate. We ensure that liabilities incurred today are properly funded tomorrow by calculating subscriptions ... .
It is suggesting that an incident that occurs today may not come to court for ten to 20 years, but that what it collects today will be sufficient to meet that claim when it does come to fruition. That is what it told the House of Lords.
An extract from correspondence to the IHCA from Dr. John Wall, chief executive, dated 30 September 1993, states: "The board of management of the Medical Defence Union holds to the policy that the members' subscriptions shall be sufficient to meet the costs of claims arising from the subscription year whenever these costs fall due, which, in many cases, can be a considerable number of years ...".
Paragraph 11 of the MDU's submission to this committee last November states: "discretionary organisations set subscriptions with a significant pay as you go element". To my knowledge, the first time the MDU enunciated a pay-as-you-go policy was in the back end of 2001. Everything it said prior to that was to the effect that what it would collect that particular year would fund the claims from that year whenever they were settled. The MDU stated in the same submission that it would have been impossible for it to collect the correct risk related subscription from obstetricians from 1980 onwards as it would have exceeded the salaries of publicly appointed obstetricians at that time. This is post hoc rationalisation, rewriting history.
Both the MDU and the Medical Protection Society are mutual organisations. The low-risk specialities subsidise the high-risk specialities. Given what the MDU said to this committee last November, which contradicts what it said on every other occasion, particularly in a submission to the House of Parliament in London, how come it did not tell its members?
Dr. Tomkins of the MDU was quoted as saying the following in The Irish Times on 1 June: “The MDU’s financial position is sound. To suggest that the MDU stance on behalf of its members is due to financial weakness is misconceived,”. Why did it collect money from its members in Ireland if it was not going to give them something for their money?
At this committee, in response to a question by Deputy Olivia Mitchell, Dr. Saunders stated: "If we had the money to meet these claims we would not be having these discussions." There are contradictions in these statements that we would like to have explained. The MDU has also stated that the obstetrics problem is the State's responsibility, not that of the union.
Appendix B to our submission quotes the Buckley contract, which states: "Following agreement between the Department of Health and Children and the Irish Medical Organisation and the Irish Hospital Consultants Association." There was no such agreement. From our point of view, consultants have received a double whammy. The contract they had with the then Minister was broken on 1 February despite many undertakings from him, some of which were in writing, that there would be no such breach. Second, the unthinkable happened, namely, one of the two organisations that had indemnified consultants and which had members in Ireland for almost a century and a quarter turned down at least 11 of its members. We do not accept the fine and nice arguments that have been put forward with regard to discretion and to the effect that the MDU or MPS has the right to refuse members assistance.
We accept that, as with any insurance policy or contract, if one breaches the terms one's insurer can turn one down. If I go to the MDU and ask for its assistance and it says the matter in question is entirely contractual and not medical or legal, it is entitled to exercise its discretion. However, we do not accept that at one board meeting last August it gave the thumbs down to eight obstetricians, all of whom happen to be Irish.
I invite the main spokespersons for the political parties to make their contributions. We will bank the questions and then hear questions from other members.
This is an intractable problem to which I have no solutions. In the briefing note the MDU describes historic obstetric liabilities as the responsibility of the Irish State because it withdrew cover for obstetrics first. The obstetric claims were large and caused serious problems for the MDU. If it was a common fund with cross-subsidisation how could the union justify treating any one speciality differently from the others? This problem must be resolved and I cannot understand why daily negotiations are not taking place. The consultants and the State would be mad to allow this issue to be resolved in the courts, over which they have no control and where they would be subject to the vagaries of the court system, and the decisions it makes. A negotiated settlement is the only one.
My understanding — correct me if I am wrong — is that the State will operate on the basis of a pay-as-you-go scheme. It has not set up any fund and in a sense it saves money in the early years of the scheme because it is not paying the consultants' fees to the MDU, or is partially paying them. While money is being saved none is being set aside. The State will have the same problems of which the MDU has complained for years. Have the delegates any suggestion as to what should happen to prevent the same problem recurring for the State, the taxpayer and consultants? The problem arises mainly from obstetric cases which are settled for high sums, such as the recent settlement of €4 million or more. There were several cases in which families of brain-damaged children received high awards. They would be infinitely better if they had never brought a case and could depend on the State to look after the child because they had to apply to the courts for every penny they needed, even to buy oil to heat the house for the child. It would be much more efficient if there was automatic State provision for brain-damaged children in public hospitals.
Public care in private hospitals will become an increasingly common feature of the health service. What is the position of consultants providing those kind of services, albeit that they do so already, except in obstetrics? This seems to be the way forward, based on the example of other specialities. What is the cover position there, or what will it be, or do the consultants know?
It is timely that the consultants have come here to make this presentation. The situation looks like an unholy mess. The terms "breach of trust" and "breach of contract" come to mind. The consultants have said that there has been a breach between them and the Department, and between them and the MDU. I presume when the MDU comes in here it will say it has had a breach of trust with the Department. The fall-out is very serious and it is difficult to see a way forward. The consultants not covered presumably include Dr. Neary and his patients. Do the delegates have any rough idea of the money involved in those claims? There is a great variation between the estimates for historic liabilities from the MDU and the Department. Have the delegates worked out what the total might be?
At the consultants' conference the Minister repeated the reassurances of her predecessor that anybody coming forward now would be covered. Do the consultants believe that? If it is the case, why should the MDU make any deal? The committee discussing the compensation for brain-damaged children has been sitting for some time. Are the consultants involved in that or do they expect that it will produce any alternatives? If not, do they have proposals which offer an alternative to this incredibly costly legal process? While people have a right to go to court it is presumably very stressful for them. The idea of an alternative is very attractive if it can protect their interests. It also ensures professional standards. Does the Minister's assurance assist in coming to a resolution in negotiations or does it put that off?
I too welcome the delegation. It suggests that the Department and the previous Minister acted in bad faith in their negotiations with the consultants. One of the IHCA's recommendations is that it would support the Department if it took a case against the MDU. Has it sought legal advice on the likely success of such a case? How far will it go? Is this an intractable situation whereby the consultants will not enter negotiations on Hanly or anything at all? Is there any light at the end of the tunnel?
We have had presentations here from the home birth organisation. Most of these cases concern obstetricians. They seem to be strongly opposed to the idea of home birth but there has been no major litigation against midwives from mothers in this area. Why are obstetricians so opposed to it and is there an implication there for insurance for midwives?
Dr. Keaveny
My understanding is that public care in private hospitals is covered by the clinical indemnity scheme. National treatment fund waiting list initiatives conducted by publicly contracted consultants in a private hospital will be covered. We do not know what the Dr. Neary liabilities will be, first because the courts vary in their awards, and second, we do not know how many of them will be won or how many have expired. It would be difficult to put individual prices on them. Dr. Neary is not included in the 11 cases recently turned down.
Not being an obstetrician, I am not in a position to comment on home births. If midwives in hospitals will be covered in hospitals under the clinical indemnity scheme and if there is a Department — supported home delivery service by Department employed midwives, then one would assume they would be covered as well in the future. We feel we are stuck in the middle between the Department of Health and Children and the Medical Defence Union. I will ask Professor O'Keeffe to comment on how we have gone about our negotiations, where we will go in the future and what type of legal options are open to us. We re-affirmed at our last AGM that we will not enter into negotiations on anything else until historic liability and the introduction of the clinical indemnity scheme is secure and safe for doctors and for patients in the future. At present, it is not safe for patients and it is not safe for us. We are pretty solid on that.
Professor Michael O’Keeffe
We have had 90 or more meetings with the Department, the MDU, the board of the MDU, the MPS, the BMA and anyone who will talk to us and who we think might be helpful. We met many of those who are sitting in front and briefed them on our policy and where we think things should go. We have been trying to find a non-legal solution to this issue, as Deputy Mitchell suggested. We are trying to get the MDU and the Department together. Up to July 2003, they had met only three or four times. As a result of our intervention, they have met many times. We believe there is a basis for a settlement.
There have been conflicting figures on historic liabilities and we do not believe the figures as reported by the Department. One of its actuaries was a company called Quantum. There was another one before that which gave a figure which went into several hundred million euro. We believe that is too high. We are supported in that by the MPS in its own figures. The figure is somewhere in between, but is not as high as that reported.
Our legal opinion on the other option is far stronger than what we have had from the Department of Health and Children. I am not privy to its legal opinion but from what I have been told, it is quite muddled and it is hard to get any firm basis from the Department on it. Our legal opinion is much stronger. The MDU cannot use discretion in this, it cannot turn down 11 members at one meeting on a similar day. It cannot turn down Irish members like that. We believe the MDU will lose its legal action if it comes to the courts.
Mention was made of the other option. The previous Minister met us every time we wanted to meet him. He did his best to find a solution to this. It is a complicated issue as both sides are intractable. We have been let down a little by the fact that he has not been able to deliver, at Cabinet or any other level, to give us indemnity, so we could take this case to London. One of the doctors who is being sued, who has had discretion used against him, would front the case. We are prepared to do that for the Department. We can go to London or Dublin. However, the Minister has not been able to give us indemnity on that issue. At our meeting in Kilkenny, the new Minister stated publicly that this was the case. There is much trust gone out of this because the previous Minister could not get it through Cabinet. The present Minister is the Tánaiste and one of the leaders of the Government. She may be in a stronger position to deliver than the previous Minister.
There are a number of caveats attached to this. We want to know what the terms of it will be, whether the Minister will give us a written assurance that she is giving indemnity, as well as the other aspects attached to it. We are open to suggestions on this and we have written to the Minister as a result of our meeting in Kilkenny, looking for clarification on these issues. If we could get those, we could move it forward and join with the State in sorting out this issue legally if we have to do so.
All committee members have touched on the final issue. Neurosurgery is coming down the tracks as a huge issue and is becoming uninsurable. Spinal surgery is becoming uninsurable. Certain aspects of plastic surgery are becoming uninsurable. There is an urgent need for tort reform. In 1993, the secretary general and I went to the Department and stated that this would become a huge issue in this country. We suggested tort reform and a mechanism that was known as the Louisiana mediation scheme. It was ignored then and now it has come back to haunt us in 2004. This issue is now a major problem for us.
I will now proceed to the next part of the session and invite Deputies Devins, Cowley and O'Malley to put their questions.
I welcome the delegation. One of the questions raised by a previous speaker was not answered. While this stand-off is continuing, will the Irish Hospital Consultants Association insist on not entering any discussions with the Department or the Minister on the Hanly report or any other reforms of the health service?
Dr. Keaveny
That is correct. We have been quite clear — at our recent AGM there was a strong voice from everyone — on this fundamental issue. Our contract essentially has been broken and there is a breach of trust. This is a problem that has to be resolved. At an EGM last February, at which 500 people attended, there was a huge show of support for action and unity from the medical body to get this problem resolved. It was only then that the Government got moving. Prior to that meeting there was very little contact between the Medical Defence Union and the Government, yet there was a flurry of activity immediately following it. Without that it would not have happened. We feel strongly on this.
My main questions follow on from that. Have there been discussions directly between the IHCA and the MDU since February 2004? Is this the first time both have been in the same room? The stance of the IHCA is that no discussions will take place with the Department about any other issues until this issue is resolved. In the scenario where there is a legal case, taken by either the Department or the IHCA against the MDU, does the IHCA feel that still would be its stance, that there would be no discussions until the legal case is resolved?
Acting as devil's advocate, some months ago, the MDU was before this committee and it stated it was not an insurance company but rather a mutual association. How would the witnesses answer that? Do they agree? Do they have legal advice that would suggest otherwise?
I thank the witnesses for their presentation. As a medical practitioner I have been a member of the MDU but am now with Medisec. If I was in the situation outlined I would be very worried. A doctor does not know if a person will take a case against him or her at any time. I have much sympathy with the witnesses, particularly when they put their trust in the MDU. It is difficult when this is hanging over them, to get on with the job of treating patients. I reinforce what they say when they claim they are concerned about those in the middle, the affected persons. The witnesses rightly point out that the tort system needs to be reformed, where fault has to be proved. These are the people about whom I am most concerned. I just keep thinking about the fact that the State got stuck into this situation with the religious orders, whereby in all these cases the State will end up footing the bill for a massive amount of money; there is no end to it. I see parallels as regards the costs we could end up with if the MDU, MPS or anybody else pulls the rug and suddenly decides not to cover neurosurgery. I have already had problems with patients because of this. I wish to ask for Professor O'Keeffe's opinion as regards the clinical indemnity scheme. One of my patients was a lady who urgently required stereotactic radiotherapy in Dublin but could not have it because the consultant was deemed not to be covered to provide that new treatment.
I would like to ask Professor O'Keeffe's opinion about the Hanly report. If Hanly is a dead duck, what is the point in talking about it? How much of this could have been foreseen by the Department of Health and Children? In the United States, for example, one cannot get an obstetrician to practise in some states because of the cost of medical indemnity. One is talking about a bill for €500,000 before one can even see a patient. How is that sustainable in practice with being able to provide a service? I would like to have Professor O'Keeffe's opinion about that in particular. How does he see the situation developing in the future? Does Professor O'Keeffe think he will see a situation where there will be public-only consultants, and at what price? Does he think it would be a big price?
I also welcome the IHCA witnesses. It is important for them to come here, given the importance of their organisation in future health service reform. I note that they were also to discuss proposed changes in hospital consultants' contracts even though the witnesses really did not get on to that. It was covered, however, in so far as they indicated there is a stand-off.
I was amused when one of the witnesses said that both sides are intractable. It appears to me, however, that in this discussion there are three sides. I wonder why Professor O'Keeffe spoke about two sides being intractable. To whom was he referring? I do not see in whose interest it is that the IHCA should remain outside the door in discussions with the new Minister. I accept that political assurances were given and Professor O'Keeffe feels slightly let down by them. It is important, however, not just for the IHCA's members — Professor O'Keeffe spoke about 500 unanimously supporting the IHCA — but I wonder how many of the 1,780 consultants in the country are members of the IHCA and support it in that respect. If Professor O'Keeffe feels he has the backing of his organisation, that is perfectly fine, and he is looking after their interests. However, certainty is needed in this situation. While the IHCA remains outside a dialogue with the Minister there will be no certainty. It is in everybody's interests that certainty is arrived at on this issue. I am not just talking about the issue of medical insurance but I am also talking about the future of the health services. I encourage the IHCA to open this dialogue. I think Professor O'Keeffe referred to the fact that a new Minister has been appointed, who is also the Tánaiste. That demonstrates the political clout and will there is to make change in the country. That is why I urge him to open up dialogue because the Tánaiste is keen to do so. We all know that time is of the essence because there is a maximum of two and a half years to the next general election. The Government, not just the Minister, wants to see improvements and change. That is why the timescale has been put on it.
If we look back at the Good Friday Agreement, did anyone think the negotiations would be going for ten years? That is an example of why we are all tired of it now and we need an end to the matter. That is why it is a good idea to come to the table and try to get a dialogue going. It sharpens the mind if we know when we are to finish it. It is not exactly a party political broadcast——
It sounds like one.
——but it is a broadcast on behalf of all Deputies to bring about change.
When is the Deputy going to ask a question?
I am coming to my question. Professor O'Keeffe mentioned the Louisiana agreement in respect of dialogue, so I would like to hear more about that. I have heard the figure of €400 million mentioned for both known and unknown historic liabilities. What is the figure the IHCA is operating off? What kind of resources are behind the clinical indemnity scheme? Has a figure been given for it? What kind of certainty can Professor O'Keeffe give to his members and their patients while there is no dialogue going on and no agreement with the Minister?
Dr. Keaveny
As regards the health service, we all go into work every day. The election may be in two and a half years time but in ten years time I will still be working in the health service. The problem at the moment is one of bed capacity; it has nothing to do with contracts. One does not need to be a rocket scientist to see that we do not have enough beds in our health system to cater for 4 million people. No matter what anyone thinks, consultant contracts will make very little difference in the health service until there are more beds. There must be acute beds, step-down beds and long-stay beds.
As regards support from consultants, 85% of consultants voted in favour of the campaign of action, so this has the complete support of everybody.
As regards the clinical indemnity scheme and certain types of treatment, there were contractual problems for people working from one site to another and that has affected the delivery of stereotactic radiotherapy. My understanding is that efforts are being made to resolve those. They come into the area of the clinical indemnity scheme to which Mr. Fitzpatrick referred.
I am not exactly sure how the clinical indemnity scheme is funded and we have not really gone into that in detail. Professor O'Keeffe may wish to comment on the number of meetings we have had and where we feel our position is in these negotiations. Medical litigation and insurance is a worldwide problem. Obstetric cover has been a disaster in many western countries. Insurance companies have collapsed in Canada, Australia and New Zealand. In England, in 1989, they saw this coming down the line and they introduced clinical indemnity in the form of the crown indemnity scheme in the United Kingdom.
People in the Department of Health and Children have travelled the world looking at insurance schemes in foreign health services, yet they did nothing in this country. They have known about it and have been warned about it by the IHCA, insurance bodies and the Medical Defence Union. Even though I have a problem with the way in which the MDU is carrying on at the moment, we must be fair in saying that it covered the high risk sector throughout the 1980s and 1990s. Some of these cases are appearing ten, 15 or 20 years later. They have a big problem, therefore, but the Department of Health and Children has a huge problem also. It has known about this but has done nothing about it. Until we took our stand very little had been done about it to date. It was only when we started getting tough that things began moving.
Professor O’Keeffe
I will address Deputy O'Malley's questions, through the Chair, first. There is nothing more basic than a doctor, his family and their possessions being on the line due to a doctor being sued personally. That includes retired doctors and their families. That is why it has become such a big issue. We are willing to talk to the Minister for Health and Children anytime. In fact, I think she had a change of heart and came to our meeting in Kilkenny, which was a great thing. She is pushing an open door as regards a lot of reforms, including beds and casualty services.
On the contracts, if the Minister is prepared to give us a written assurance that she will indemnify us and if she is prepared to talk to us on the nuts and bolts of that, there is no problem. We will talk about the contracts and if she wants to resurrect Hanly, or Hanly II, we will talk about that as well. There is nothing personal about it, it is just a matter of business and there is nothing more basic than that. Members of the committee must appreciate that if they were being sued personally, and their families, possessions and properties were on the line, they would feel as we do. We represent 90% of consultants and have the unanimous support of the profession. Nothing has united the profession more than this issue.
The MDU is a mutual association. When doctors qualify, there are only two organisations they can join — the MPS or the MDU. They cannot go to Eagle Star or AXA. They have no other choice. That is what doctors face. We expect people to behave honourably and responsibly when they use discretion in this instance. I believe what they are doing at the moment is indiscriminate and reckless. If they have a financial problem, they should come clean on it and should stop using doctors as pawns in this game.
Should we resurrect or resuscitate Hanly?
Professor O’Keeffe
That is a matter for the Government. If I were a politician, especially a Fianna Fáil one, I would put it to bed.
If a legal case is taken by Irish Hospital Consultants Association or by the Department, will the association still not be in discussions with the Department about other issues or will it change that stance?
What figure is the IHCA using for historic liabilities? Will the IHCA give me a brief outline of the Louisiana system?
Dr. Keaveny
The figure is an extremely difficult one but everyone in the industry feels the figure of €400 million is at the highest level and that the figure is probably more likely to be at the level of approximately €240 million. It is also worth noting that this figure would be spread over 20 years. This is not a figure which will be paid out on an annual basis; it will be spread out over years. In effect, it is the cost of a half a day running the health service. We are not talking about a huge amount of money each year.
In regard to the money that is being collected and accumulated now in terms of the clinical indemnity, will the IHCA clarify whether there is nothing there at the moment?
Mr. Fitzpatrick
The clinical indemnity scheme is being funded on a pay-as-you-go basis; it is being funded by State funds. The cost of indemnifying consultants in 2002-03, when the old system under the MDU and MPS was in place, was approximately €45 million, of which the State would have paid €31 million or €32 million and consultants — between those in the public sector and those in full-time private practice — would have paid the balance of approximately €13 million or €14 million themselves. One can argue that the €13 million or €14 million will continue to be paid to the MDU or the MPS for what we call the non-indemnity services and also for the private sector. There is a short-term saving to the State in that over the next two or three years, few cases will come before the State claims agency. It will take a number before there is a pay out. It is like other aspects of State — it will be on a pay-as-you-go basis.
Deputy McManus raised a query in regard to an alternative and Deputy Fiona O'Malley asked about the Louisiana system. What we proposed in 1993 would not have been unlike the Personal Injuries Assessment Board in that a medical panel would have assessed the claim of a patient. There would have been certain regulations in regard to the make up of the panel. That panel would have decided whether compensation was appropriate and, if so, how much. Written into it would have been that the decision of the panel would have to be confirmed by the High Court. Obviously, if either side was dissatisfied with the result, it could have taken action at that stage in the High Court, so the constitutional right to go to court would have been recognised. It was something similar to that, but it was not acted on.
The point was made that the Department has been looking at this since 1992-93 at our urging. At that stage, we thought obstetrics had gone through the roof. It was costing about £4,000 per year to indemnify somebody. Looking at the United States, as Deputy Cowley said, a number of the states did not have obstetricians. In addition to what was stated by the MDU in private meetings, unknown to us, the Department would have had to have been aware that there was something coming down the line which would have to be dealt with.
In reply to Deputy Devins' question on legal action against the Medical Defence Union, we have always stated to the Department that there is the twin track approach of trying to reach a negotiated settlement or failing that, a test case being taken by some, or all, of those consultants who had been turned down. In the event of that case being taken against the Medical Defence Union, we would most certainly co-operate in full with them. We have given that assurance many a time and oft.
In regard to discussions between the IHCA and people from the Medical Defence Union, we have met them on numerous occasions. However, over the past two months, we have not known when they have been in Dublin. They were in Dublin last Monday for a meeting with the Department of Health and Children and when we looked for a meeting, we were told their travel and other arrangements were such that they could not meet us. I would not dare to say they are avoiding us but they have not met us in the past two months. Prior to that, we would have met them maybe ten times since February. We have travelled to London.
I have to declare multiple interests here because I am a member of the Irish Hospital Consultants Association and I have been with the MDU since I qualified. In addition, I am on the Irish committee of the MDU. This is an appalling situation and I tabled an Adjournment matter on it some two years ago in the Seanad. Rather than remaining the same, the situation has deteriorated considerably.
There is one thing which concerns me about the legal action being suggested and it comes up in appendix C of the document. A secret deal was made between the Department and the MPS. It states that following the announcement from the MDU of its decision to increase obstetrics subscriptions to €499,000, the MPS entered into an arrangement with the Department of Health and Children whereby consultant obstetricians who wished to leave the MDU could become members of the MPS at the same subscription level as existing MPS obstetricians. It further states that this arrangement, part of which remained confidential — or secret — until details were discovered under a freedom of information request provided, in effect, that the Department of Health and Children would act as a reinsurer for those consultant obstetricians who had moved from the MDU to the MPS in the event of a ringfencing of subscriptions of this group not being sufficient to meet claim.
I think the MDU will say that because of this secret deal, it is deprived of subscriptions which, of course, would have gone forward to cover claims. I remember that at a meeting of this committee, the head of the MPS, Dr. Hickey, said he regretted very much that this had been a secret deal. Does Dr. Keaveny think that will influence the legal position?
Dr. Keaveny
There is no doubt that the deal brokered between the MPS and the Department of Health and Children had a catastrophic effect on the cash flow of the Medical Defence Union. However, at that time, as the Medical Defence Union subscriptions had been rising — a number of people had moved to the MPS — we would certainly blame the Department for not addressing the historic liabilities. It is incredible that the Department could have gone into a deal where it only looked forward and did not look back.
Professor O’Keeffe
I do not think it will influence any legal action. It was secret in the sense that the MDU got the document under a freedom of information request and, subsequently, we all got it. There was nothing untoward in the document. I think the MDU handled the situation badly. It came in and upped the subscriptions to an unaffordable level instead of going to the Department and negotiating something different. The Department was panicked and had to find a way to insure these obstetricians, both public and private, and this was the way it did so. There is nothing secret, bad or wrong about subsequent documents which we have all read. The one point with which I agree is that in April 2001, it became clear there was a problem — it is now October 2004, some three and a half years later — and that is when the Department should have acted on the historic liabilities. The dogs in the street knew this was a problem. When the introduction of clinical indemnity was first discussed, we stated that this would be an issue and that the Department would be obliged to deal with it. However, it did not do so. I do not believe that, in the end, there was anything secret in the deal.
I do not believe any of us knew about it.
Professor O’Keeffe
With respect, there was an immediate problem in terms of insuring these obstetricians who could not have afforded the €400,000 subscription which was suddenly landed on them. In my view, the MDU could have been much more politically astute and negotiated the matter in a much better way and not presented it as a fait accompli. They had to find an immediate solution but they should have taken matters further.
A task force was established in the then Department of Health ten years ago to deal with the issue of medical litigation. This is not a new problem for the Department. In 1999, the idea of enterprise liability was first mooted by the Department in order to progress matters. It was around that time that the MDU informed the Department that it could have difficulties with its historic liabilities. Nothing was really happening in the negotiations with the Department and when the MDU increased its subscription to almost €400,000, it may have been laying down a marker in order to encourage the Department of Health and Children to take action on this issue. Everyone knew that enterprise liability was coming down the tracks.
When the deal was made with the MPS, it could be perceived by some that the Department saw a quick way of reaching an agreement with a competitor in respect of the medical insurance market in order to buy more time to allow it to deal with this issue. Due to the fact that the State pays 90% of medical defence fees, the costs in 2001 would have been huge. By making a separate deal with the MPS, matters could be put off for a short period.
The MDU has decided that it will simply not pay and we have seen what it has done as regards the 11 obstetricians to this point. After 89 meetings, it has almost become obvious that the taking of test cases in Dublin and London is vital. The MDU has taken its case here. It felt that it was lied to or fooled by the Government in 2001 when everyone moved to the MPS. That is a matter with which the Government will be obliged to deal.
The Department of Health and Children — like everyone present at this meeting — is aware of what is happening here. If a deal is made, taxpayers will be liable to pay out millions of euros in respect of the cost of these cases. The Department of Health and Children, which has a responsibility to taxpayers and which will not give in on this because it is aware that it will cost hundreds of millions, made a separate deal with the MPS in 2001 in order to defer the matter. The MDU has put the gun back to the head of the Department by stating that it will not cover consultants unless a deal is made. Any deal made with the MDU at this point will also apply to the MPS because that is the way competition works. We may, therefore, have historic liabilities coming through from the MPS for the period prior to 1991 and for the past three years, when the special deal was made. The cost to the taxpayer could be hundreds of millions.
If the MDU adheres to its current stance, there will be no option but to take court cases in Dublin and London. I feel sorry for the small number of obstetricians who have been hung out to dry in order to have the matter dealt with. People with some of the sickest children who have unfortunately been damaged in these cases will take civil actions against consultants, many of whom have retired, to try to obtain compensation in the courts in order that they might look after their children. This may appear to be a power play between the Department of Health and Children and the MDU but it is wrong.
I wish to return to what Professor O'Keeffe said about the court case and the fact that the legal advice received was fairly sound. If the association were indemnified by the State, how much would it cost? If the State did indemnify, would that be cause for it to return to the table and begin negotiations?
Dr. Keaveny
We made it clear to the previous Minister for Health and Children — we have not yet had direct contact with the Tánaiste — that if this issue can be resolved and if we can obtain a letter of comfort in which the inclusions and conditions laid down are clear and satisfactory, we will be quite happy to enter into discussions. When people say that we are not talking or doing anything in the health service, they are somewhat incorrect. Besides going to work every day, we are involved in a number of local issues, task forces, training, and validation of the hospitals. There are a number of matters we have not involved in the contract and we also have not involved ourselves in the Hanly reports. However, we have involved ourselves locally in respect of the European working time directive and a number of other areas. We are doing a great deal.
Dr. John Clarke
This affects the generality of the medical profession at present. The committee should not be under the illusion that it just involves consultants who are working in the public sector. That group of consultants receives a 90% subsidy. However, those in full-time private practice have to pay the full amount. We have with us an obstetrician who has received a claim about something which occurred 14 years ago. We also know of another obstetrician who, at the age of 82, received a claim about something that happened at the tail end of his working life. These people are concerned about the problem we face.
The uncertainty that has existed in the insurance arrangements for the private sector has led to the fact that hardly anybody has entered into full-time private practice in this country in the past five years because nobody knows what is going to happen. If one takes it that it seems as if the Government strategy will result in an increased dependency on the private sector, it is important that this matter is resolved.
What about the cost of indemnity?
Professor O’Keeffe
One of the doctors would have to take a case, either in Dublin or London, and the State could indemnify him or her in that situation. It could cost anything up to €500,000.
Dr. Keaveny
The negotiations between the Department of Health and Children and the Medical Defence Union are advanced. We need to obtain an understanding from the Medical Defence Union of what is its financial position in respect of Irish historic liabilities. That is the most important thing we need to discover. We need to know whether the Medical Defence Union is in a position to meet its liabilities. If it is not, that is fine. The Government can then take on the matter. The Government — we agree totally with this — needs value for taxpayers' money and it needs to enter into an arrangement that is solid. There is no point in the Medical Defence Union stating that it is in a sound financial state and that it can cover whatever it desires. That is what it has already decided, namely, that it will cover whatever it likes. If it does not like a case, it will hang the person involved out to dry. That is unacceptable.
The most important thing we can discover today is whether the Medical Defence Union has any money and whether it is prepared to meet Irish liabilities and, if so, how many. Until that matter is resolved, the Government cannot be expected to make an agreement. We are the ball in the middle of this football match. We have gone out of our way in the past two to three years. I must have attended 90 or 100 meetings in respect of this matter during that period. If we could have solved the problem by now, we would have done so. We are pushing both sides to an agreement. At present, however, there must be a coming together of the Medical Defence Union and the Department of Health and Children and there must be an agreement on the amount of money available. The latter and the assets of the Medical Defence Union must be clearly visible so that we can know what it can pay in respect of Irish liabilities.
Professor O’Keeffe
We have suggested some months ago, because of a problem — I do not know if it involves personalities or otherwise — between the Department and the MDU, that a mediator be appointed. The mediator would be able to referee the situation and we could then know who is behaving badly in the negotiations. Due diligence, which the Department wants, must be undertaken because we do not want to be back here in five years, if an agreement is reached, and find the MDU is in a similar position. We must know whether it is viable into the future. It would be helpful if a mediator, agreeable to both sides, stepped forward to referee the game between them and find a non-legal way out of this.
Dr. Eamonn Carmody
I refer to Dr. Clarke's comment. Nobody should have a doubt about the importance of the private sector. I work in the Bon Secours Hospital in Cork, where we have 342 beds. Last year we had 15,842 inpatient admissions and 8,425 day case admissions. That is a major contribution to medical care in the Cork and Munster region. We are having difficulty recruiting because of the uncertainty in the medical indemnity environment. Permanent, irreversible damage will be done in the private sector unless we get to a scenario of predictable, affordable and reliable indemnity.
Dr. Clarke
MPS has made a clear statement of what are its assets — £800 million. We know where we are with the company. The MDU never stated what assets are at its disposal to deal with claims and I beg the company to do so at this forum.
Did the IHCA know of the deal between the Department and the MPS?
Mr. Fitzpatrick
Around May 2001, it became known that the Medical Defence Union was increasing its subscription to €499,000. The union was pricing itself out of the market. Approximately 35 obstetricians were in the MDU but were not in a position to pay, even those who received an 80% or 90% reimbursement from their employers. They still needed between €50,000 and €100,000, not to mention the four who worked exclusively in the private sector who were supposed to come up with €500,000.
There was a clamour for an alternative or a rescue package. We knew the Department of Health and Children and the MPS were reaching an arrangement under which people could move across if they wished and it would cost them £52,000, similar to existing MPS members. We did not know, however, that the Department became the re-insurer. Both the MPS and the MDU were asked by the Department to make proposals to solve the problem and there is documentation to validate this. The MPS came up with a proposal, which the Department accepted, while the MDU was wrong-footed yet again.
Was the IHCA assured its members would not be adversely affected by moving from the MDU to the MPS?
Mr. Fitzpatrick
No. A number of those moving across wrote to the MDU stating they could not fund their share of the bill and, therefore, they were moving with regret. They sought an assurance whereby if a claim was made regarding work prior to 2001, the MDU would assist them. The MDU did not give a guarantee and because of the discretionary nature of a mutual society, we would not have expected that. However, the time-honoured tradition is that one would go to the society of which one was a member at the time of the incident for assistance. If one had moved from the MPS to the MDU, the same would have applied.
Dr. Clarke
The other issue that arises is what happens to people who choose, because of the perceived weakness of the MDU, to switch to the MPS. They are left hanging, not knowing what will happen their historic liabilities. Assessments have been made of what "tail" insurance to deal with that might cost. One stated it would cost €2.4 million per member and, for any other speciality, the annual premium multiplied by three. It could cost one a minimum of €100,000 to ensure one's historic liabilities personally up to €2.4 million.
Dr. Keaveny created the impression that there is a difference in status between Irish and non-Irish members of the MDU and there is a pool of money. He asked the MDU to outline what resources are available to Irish members. If one is a member of the MDU, one is a member, whether one is in Cornwall or Cork.
Professor O’Keeffe
That is the case. I have often had the impression from the MDU that it tries to keep the Irish operation financially independent of the UK operation but that is not the case currently. Perhaps Dr. Saunders will clarify where all the money has gone over the years and whether Irish money subsidised MDU operations in other countries that got into problems.
Dr. Clarke
A body of opinion claimed Irish members subsidised overseas members.
Mr. Fitzpatrick
The MDU stated in 1990 it had members in 70 or 90 territories. According to the submission I made to the committee last November, it is down to the Republic and Great Britain. The MDU has retreated from the southern hemisphere and our belief is it will retreat from Ireland as well. Whatever the rules state, it does not treat all its members similarly. While the union states it acts in the interests of the majority of its members, the majority is not on this island.
I thank the delegations for outlining their concerns about medical litigation. We would prefer to hear about changes to consultants' contracts.
They should be invited back to discuss that issue because it needs to be discussed.
Professor O’Keeffe
We would be happy to do so and I am sure the Minister will be well in her position by then.
Sitting suspended at 11.10 a.m. and resumed at 11.15 a.m.
I welcome Dr. Michael Saunders, chief executive, Dr. Christine Tomkins, professional services director and Ms Mary-Lou Nesbitt, head of governmental and external relations, Medical Defence Union. I will ask Dr. Saunders to commence the presentation on medical litigation issues.
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 the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.
Can I take it that the presentation has been read and noted by members and we will go straight into questions. Is that agreed?
Dr. Michael Saunders
Do you not wish me to make a presentation?
I think we should have a brief presentation.
Okay.
Dr. Saunders
I will be brief on the basis that the submission has been read. One of the key points I wish to emphasise, which was touched on in the previous presentation, is that the MDU is not and has never been an insurance company. It is a discretionary mutual company as stated in all our publications, application forms and renewal forms. Members have a right to seek assistance from the MDU but not to receive assistance. A request must be fairly considered and the board has an overriding obligation to the totality of its members. It is not an insurance company. One can talk about cover and claims in the context of contracts, all insurance terms, but the MDU is not an insurance company.
The problem arises from the incidence of cerebral palsy. It is important to realise that the problem arising from claims from cerebral palsy is not uniquely Irish, it is a problem faced by all western countries. They all have had to deal with it by way of some form of State indemnity or strict tort reform.
The financial state of the MDU is stated clearly in our annual report, on which I will happily answer questions. The sad facts are that between 1977 and 2001 the obstetricians subscribed over €25 million and we have spent over €70 million. Since I last appeared before the committee we spent another €7 million on claims brought against our consultant members — they were not all claims against obstetrician in Ireland.
On the issue of subsidies, each sub-group of members in the MDU believes it is subsidising another, which is not true. I have shown the Department a 20 year contribution analysis of subscriptions from Ireland which indicates that all the money subscribed by all Irish doctors over that period has been spent. In fact, money has been received from other members in order to maintain the Irish claims. The idea that Irish money has been siphoned off into other jurisdictions is fantasy.
As regards due diligence, I said at public meetings of members and on RTE that we are quite happy to have a due diligence exercise. All I ask is that the Department defines its solution to the problem. The questions it wants answered will arise from that statement, following which there can be a due diligence process. I have nothing to hide; the facts are as stated.
I would like to draw the attention of the committee to the letter discovered under FOI. The letter from Mr. Kelly, Secretary General, to the Secretary General of the Department of Finance shows that this problem was highlighted. It was known a problem would arise if enterprise liability was introduced in this way. I still believe the problem can be resolved by way of a sensible discussion. I welcome the Tánaiste's announcement that patients or doctors will not be exposed. Given her reputation for dealing with issues practically and quickly, we look forward to a meeting. I will be very pleased to answer any questions.
I suppose I should ask what the President of the Irish Hospital Consultants Association would like to ask, that is, given its assets, is the MDU in a position to pay for the historic liabilities? I am curious to hear the reasons given for refusing to cover people who seek assistance. The IHCA mentioned that 11 consultants had been refused. That seems a very high number in a short space of time. Is it normal practice for the MDU to turn down such a large number of people in one blow or is it a symptom of a relationship with the Irish members of the MDU at present that they are being treated differently? That is the implication that one got from Mr. Fitzpatrick.
How does the MDU see this being resolved in terms of historic liabilities? Does it accept some responsibility? I will quote from the IHCA's report — it is what the MDU is now saying — "...that the State has full responsibility for historic liabilities." I do not think people will feel that is a reasonable approach. We need a compromise to get us out of this mess. To simply state baldly that the State is responsible for historic liabilities is unreasonable. Is it not also reasonable to expect an organisation like the MDU to track and measure trends ahead of time? I appreciate that it is not in the insurance industry. Is that not the business of insurance? It must look at trends, understand what is happening and plan, prepare and change practice to meet them.
I thank the MDU for coming here again. The committee wishes to resolve the issue as quickly as possible to the satisfaction of all. The previous presentation raised an issue that Deputy McManus touched on and I shall explore it further. What precisely are the historic liabilities of the MDU for Ireland? Dr. Saunders said he would be quite happy for due diligence to be carried out and he mentioned some pre-conditions. Unfortunately, I did not have time to write them down. Perhaps he could spell out the conditions and why they are being put in place before due diligence is carried out. At its last claims meeting the MDU refused cover to 11 Irish obstetricians. Were other members of the medical profession given the same treatment at the meeting?
I thank the organisation for coming here again. There are two sides to every story. The MDU came here before to outline its case and the consultants did the same. The question was whether the organisation was prepared to allow a referee or mediator resolve the situation with the involvement of the other side. Both sides hold fundamental views. People will suffer. I am sure the problem is not helping the organisation and it wants to leave the country as quickly as possible.
I do not doubt the group has spent everything it got in this country and will spend more in the future. Having listened to the consultants, it is obvious they are demoralised because they do not know what is around the corner. What is the MDU's view on the matter? Will it sit down with a mediator to resolve the problem?
I welcome the members of the delegation. It is beneficial that they heard the entire debate and know our concerns and problems. We can hold it to the allegations made. The MDU needs to address the points made about the annual report 2000. It seems to be in a strong financial position. Why does it not want to carry the historic liabilities?
Can the MDU confirm that it is irrelevant where a member comes from and that it grants equal status? Does it intend to withdraw cover from more Irish obstetricians and people seeking cover? It said that each case is assessed on its merit. Denying 11 people cover on the same day flies in the face of that statement. Can it demonstrate to us that an Irish obstetrician and MDU member is treated the same as a British obstetrician and MDU member? Perhaps it is unreasonable to say it but we are concerned about a possible bias. What exactly does the organisation give people?
The previous meeting revealed that the MDU may be discriminating against its Irish members. As much as 4% of its membership is Irish and 11 people were rejected for cover at the last MDU meeting. If there was proportional representation then 300 British members could also have been rejected. MDU meetings are held in London. How many people are rejected at each meeting? How would the organisation solve the problem? What is its final offer? Given what has happened over the past four years this appears to be like an auction.
The MDU feels particularly aggrieved because it considers the State's deal with the MPS was misleading. What is its final offer to the Department of Health and Children? What does it see as the major stumbling blocks to a resolution? Everybody now feels that the only resolution is for an Irish member of the union to lodge an obstetrics claim in the High Courts in Dublin and London.
Doctors pay €65,000 per year. What do they get for it?
Dr. Saunders
I probably will repeat myself when answering the questions because there was some overlap. The first question was on MDU assets. They are clearly stated in our annual report but unfortunately I did not bring a copy. I think for the year ending 2003 the assets were £110 million. It was further supported by what is described as re-insurance and further capital funding thus increasing the assets to about £200 million. It matches the known liabilities.
An earlier presentation compared us to our competitors. Members must understand that there is a fundamental difference in philosophy between us and the other mutual defence organisation, the MPS. We have long believed, and I have suggested it in the context of Irish members to the DETE, that there should not be a discretionary element for the provision of indemnity. It should be a matter of contractual right, which means insurance. I am sure I told the committee this on a previous occasion that we introduced insurance for most of our members — sadly it was not possible for obstetricians — in 2001 in Ireland, a policy underwritten by Eagle Star, which is part of Zurich Insurance and of Zurich International the main Zurich company. We did exactly the same in the United Kingdom.
We believe indemnity should be provided by insurance. If it was, this problem would not arise again for two reasons. First, it would state in black and white what were the benefits, the terms of the contract and what it covered. If there was a dispute then it would not be down to the discretion of the directors of the MDU but a matter for a judge in court. In the case of an Irish policy, that would be an Irish judge and court.
The second reason is that any liability swings volatility in the market. When something happens — as has happened here — it becomes the responsibility of a major company with shareholder assets. There are no shareholders of the MDU, no capital has been subscribed for this purpose and no solvency margins have been built up because we are not an insurer. Insurance companies have all of this and the money, the assets of the shareholders, the solvency margins required by the regulatory authority — IFSRA here — are there to meet the volatile swings in the market. So they can move these liabilities. I call it the bucket of money approach. One just gathers in the money and ladles some out and all the while cash in exceeds cash out — happiness or what Dickens described as Micawber economics. They can shift the liability to the proper regulated environment of insurance. The MDU is well down that line. In the United Kingdom it has been insuring since 2000 and in Ireland since 2001. Therefore, what would be cash in the balance sheet, which might be the effect in our competitors, is cash in somebody else's balance sheet. However, it is protected by the regulatory effects of insurance.
With regard to the reasons for turning down individual requests for assistance in Ireland, eight of the 11 are obstetricians and three are other consultants with other issues. We believe those three are covered by the terms of the enterprise liability, an entirely separate issue. If a proper indemnity is provided elsewhere, it is a duty incumbent upon a discretionary organisation for that indemnity to be sought first. That situation is not unique in Ireland. It has arisen historically, both in the United Kingdom and Ireland. Where members are covered by insurance policies for items, it is clearly not in the interest of the mutual to meet a claim since an indemnity exists somewhere else. There are a number of cases which we believe are covered under the Government's terms under the order signed by the Taoiseach. No doubt there will be a dispute. However, that is the reason the number is more than eight.
The eight cases arose together because the MDU board does not meet every week. It meets four or five times a year, or as required. Therefore cases accumulate. They were all dealt with in the final stages by one board, but in fact had come in and gone through our various review features — different levels of committees examining the features in each individual case — before coming before the board as a group. For example, the board will meet again in November when there will be other cases to be reviewed. Although it may look like they all came together it is just the natural buffer of a period of months.
It is not possible to say that in these circumstances we will or will not provide insurance because I am advised in law that fetters the discretion. Each case must be considered on its merits. No defence organisation will tell us that if a tick is made in a box, it would always assist whereas if it is in other boxes, it never would assist. It is a contract of indemnity and that is how insurance works. Conducting insurance business without the proper regulatory approvals is a criminal offence, which is why each case is considered on its merits.
The question arose as to whether we bear some responsibility. That is interesting. Of course we bear some responsibility. The responsibility of the board of which I am a member is principally to the company, which means to the majority of its members, British and Irish, and not just to a tiny sub-group. In terms of discharging our responsibility, the figures are set out. We took in €25 million and out of that we spent €70 million. That is a lot of responsibility and a lot of support and subsidy from other members. If the figures turn out as we think they will — I will come to the actual figures in a moment — there is probably at least another €60 or €70 million we think we should be prepared to pay. This brings us back to the Deputy's point about the fair resolution of the problem.
We are trying to meet our responsibilities, but our obligation is to behave responsibly to the company, to all the members of the MDU and for them to be treated equally. We cannot be responsible to the majority and just lavish every last penny on a small sub-group of members. Then there is the argument——
Will Dr. Saunders clarify what he means by sub-group of members? Does he mean the Irish obstetrician members?
Dr. Saunders
Yes.
Are they described as a sub-group rather than as part of the general membership?
Dr. Saunders
They are a specific group of members who are facing a specific problem, with specific financial demands upon the company.
Therefore, they are treated differently and a member is not a member in the——
Dr. Saunders
They are treated exactly the same in the sense that they are part of the whole. However, the overriding duty of the board is not to allow any single member disproportionately to affect the interests of the whole. We must think company wide.
All right. I would like to put a supplementary question later.
Dr. Saunders
That is the legal obligation on directors. We were asked if some compromise is possible. We have offered a compromise in that we have suggested that we keep the known cases, that is, the cases that were reported to us prior to the introduction of this scheme. We would go on looking after those cases and the new ones coming forward would be dealt with by the State. Should we be able to track and measure ahead of time? In the document——
That is an important point. What has been the response of the Department?
Dr. Saunders
To that suggestion?
Yes.
Dr. Saunders
It was only in July that it said it had authority to negotiate with us with a view to putting a proposal to Cabinet along those lines. Until then, these were merely talks about the possibility of negotiations.
Has any progress been made on that since July?
Dr. Saunders
The trouble is I want to believe there is progress. We identified the issues. The Department, after some pressure from us, has indicated a willingness to set out what I call a hedged agreement. This would explain what this arrangement might be. It would be a non-binding document, but, of course, would have to have the approval of Cabinet and the Government. From that would arise the question of due diligence, to which I have referred. That document is being discussed. It is not easy to make firm progress. We first provided a draft document in February. It died fairly quickly; the Department was not interested. Now it is more interested and the document is being revised. All kinds of new clauses have been suggested by, for example, the Office of the Chief State Solicitor. These are being discussed. Is that progress? It is some movement. Will it result in a satisfactory answer from the MDU's point of view? I do not know.
Is the discussion document being treated as the basis of a compromise agreement?
Dr. Saunders
It is being treated as the basis of what we are talking about.
I asked about the mediator or referee.
Dr. Saunders
I would be happy to deal with that now.
I would like the members to ask their questions and then we will come back to the kernel issue. We will come back to that in a moment.
Did I understand Dr. Saunders to say that the MDU will deal with the cases or litigation already on its books but that it will not take responsibility for new cases coming forward? We are talking about this small group, the obstetricians, for instance.
Dr. Saunders
Yes, that is the basis of the proposal.
Therefore where people have brought cases against them, will the MDU deal with that and carry it through?
Dr. Saunders
Yes, that is what we propose to do.
Does the delegation see a need for a mediator and, if so, would the delegation be prepared to accept a mediator or a referee who might be able to sit down with all the parties and try to work out a solution?
Dr. Saunders
We suggested a mediator, I forget precisely when, but easily two or three months ago; it might even have been further back. The idea was rejected by the Department. We have suggested it since and it has again been rejected but some progress has been made because now there is a willingness at the end of each meeting to write down precisely what all the parties think has been agreed and what action will be taken between one meeting and the next. There now appears to be a willingness on the part of the Department to set up a follow-up meeting or meetings. Sometimes these matters can be dealt with by side discussion groups and that too is written down and signed by myself and the Secretary General, if that is progress.
I hear what Dr. Saunders is saying. He also said he would like to know that progress had been made. I understand that to mean he feels there has not been progress. Is it not therefore time to engage a referee or a mediator?
Dr. Saunders
An independent chairman is a term I would prefer; a mediator suggests a person who would say, "this is the answer or that is the answer". Clearly, this must be achieved by agreement on both sides. I have no problem with an independent chairman and we have suggested that repeatedly.
My question is about the sub-group. I would prefer to hear the answers to the questions already posed. Thank you.
Dr. Saunders
Members talk about track and measure. Just inside the cover of this book is the graph which has been published in the press, showing when it was first noted that obstetric claims were going up. Payments out were increasing by 26.5% per annum, which is not the same as saying individual claims are inflating by that amount. There were more claims and they were more expensive in actual costs, doubling over a three-year period. It was known and we raised it at that time with the Department. I refer to the Secretary General's letter. He appreciated this was the problem so the Department was aware of it. We received certain assurances as I have explained to the committee before. Those assurances came to nothing which is why we increased the rates. I admit we got it wrong over that period of time. We should have pushed the rates up earlier, we should not have taken the assurances and we are still facing the problem.
It is very difficult to be precise about the figures for historic liabilities. In our view, total obstetric liability in Ireland is of the order of €130 million, give or take 10%. It must be give or take because one does not know what the trends might be in the courts. The total outstanding liabilities on the Medical Defence Union, MDU, figures are approximately €130 million. It is slightly more in what we call historic IBNR, that is, cases that are not currently known about, such as deliveries that have happened that will yet turn into litigation. Slightly less than half would be the known cases. Working on a figure of 50-50 would not be far wrong. It is approximately €65 million of known cases and €65 million of historic cases yet to come forward.
That bears no relation to the figures that were floated by the Department which quoted €400 million.
Dr. Saunders
There is a report from a company called Quantum. We are told the median figure in the range of figures given in that report was €400 million. We do not know whether that increases the weight on the IBNR cases or whether it thinks the known cases are undervalued although it is difficult to undervalue the known cases because they are known and are being settled now. It is probably a difference in opinion. I say "probably" because I have not seen this report yet. It is a report on frequency of cases, claims inflation, that kind of information. If one makes a slight change in the assumptions, one makes a profound change in the valuation. The evidence given to the Committee on Public Accounts by the chief executive of the NTMA, confirmed the figure of €400 million and he stated the same sort of figure also applied to our competitors.
Why has the Medical Defence Union not seen the report?
Dr. Saunders
We have not seen the report because it would only be released to us if we signed an agreement which would not even have allowed us to acknowledge its existence. Since everybody in Ireland knows of its existence, we thought that was ridiculous.
I asked Dr. Saunders a couple of questions. The first was about due diligence and the conditions he appeared to attach to it at the beginning of his presentation. I ask him to reiterate them. On the second question, referring to the claims meeting where the 11 Irish members were rejected, were any other members of the MDU rejected at that meeting?
Dr. Saunders
I apologise to the Deputy. Those questions are next on my list. Preconditions to due diligence are purely that it should be defined in a document what the arrangement is and if that is likely to be recommended to Government. From that statement will arise precisely the questions which need to be answered. When those questions are defined, they can be included in the non-binding heads of agreement and that due diligence process can commence. I have no difficulty in sharing the contributions from Ireland, in producing figures and business reports which, in my view, will show that we can meet our side of that bargain. However, until one knows what the bargain is, how does one know what side has to be met? The Department will define as reasonably as it can what it regards as a reasonable arrangement. A whole series of questions will then arise and nothing need prevent its nominated accountants seeking the information.
Surely they are looking to find out what assets the MDU has and whether it has the reserves to meet its side of the bargain.
Dr. Saunders
The assets and the overall position of the MDU is signed off every year by independent international auditors and that is shown in the annual report. If the auditors wish to satisfy themselves — and I do not think this would be unreasonable if that is what they want to do- that there is not reinsurance that specifically attaches to these cases which we would in some way use for some other purpose, or there are not hidden agreements which would provide specifically for some funding for Irish obstetricians — I know there are not, but if they want to see and satisfy themselves that such is the case — I have no problem. There is no pot of gold but if they want to be sure that is the case, they can have a look.
That is surely the point. They should be allowed to have a look without a metaphoric gun being put to their head, a case of tell us what the agreement is and then we will let you look.
Dr. Saunders
I disagree with the Deputy. Nobody denies there is a problem; nobody denies that the overall funding position of the MDU is as stated in the annual report. It would be a criminal offence of the directors to sign it off if that were the case. They think there may be special arrangements. I have told them there is none and they are perfectly entitled not to believe me but they should tell me what the arrangement is.
You should let them have a look without that, without having to know what the arrangement is.
Dr. Saunders
The obligation to manage the MDU is not theirs, whatever the situation is; the obligation rests with our directors. It is not a question of telling us how we might manage this business for the best or exclusive benefit of Irish obstetricians because we, the directors, are obliged to manage our business in the interests of all the members.
The Irish members.
Dr. Saunders
Including the Irish members, whose money and that of some of the other members, has long been exhausted in paying for obstetric claims.
It could be construed by certain people that the MDU's unwillingness to do this is because it wants to boot out the Irish members.
Dr. Saunders
I understand that such comments are made and it bedevils this kind of discussion. I have no problem with due diligence. If I am told what the questions are and why those are the questions, the MDU will provide the evidence. We should be told what the arrangement is going to be. People regard this as a reason for pulling out of Ireland. We are not pulling out of Ireland; we shall stay in Ireland so long as the members want us to stay in Ireland. There are comments in the submission about the fact of a catastrophic decline in membership and that is not true. Even the many members who are leaving write to me to express their shame at the way we have been treated in this matter. They leave with great sadness.
I will allow a round of questions.
I declare an interest at the outset — I am a member of the Medical Defence Union. Having listened to the hospital consultants, the representatives of the MDU and the Government side, it appears to me that we are stuck in a logjam. Somebody will have to move at some point. It is a matter of political negotiation at this stage. We know the MDU figures. We have a fair idea, albeit somewhat hazy, of the future claims coming down the line. It will take a small act of will on the part of all the parties to move things forward. Everybody seems to be sitting on their hands rather than making a move.
This morning's debate has shown the committee that there is little it can do about this matter. The best suggestion made is that an independent chairperson or a mediator be appointed to act quickly. When the Tánaiste attends a meeting of the committee in the next two weeks, the most important part of the committee's work schedule may be to see whether the Department can act quickly to ensure that an independent chairperson or mediator is brought in to find out the bottom line positions of both sides.
I have to declare an interest too — I am a taxpayer and I want my interests to be protected. I consider it to be completely wrong to base a sub-group on geography rather than practice. The association seems to have practice figures for Ireland. Does it have similar figures for Scotland, for example? Are the figures for England compiled on a county basis? I find it discriminatory to refer to Ireland as a sub-group. I would have thought that obstetricians are treated the same as members of the union regardless of where they come from, but that is clearly not the case.
Dr. Saunders said in the House of Lords in 1998 that he was confident that the union's subscriptions were sufficient to carry liabilities into the future. I accept that 1998 is a long time ago, but Dr. Saunders said today that the union continues to have assets of approximately €200 million and an historic liability of €130 million. It is clear that its financial position is strong enough to deal with it. Dr. Saunders gave those figures to the committee today — I wrote them down. I declared my interest as a taxpayer because I do not see that the union is really honouring the commitment it made to its Irish members in the grey area known as mutual cover. That is what the committee is concerned about.
Does Dr. Saunders believe the MDU, which was established in 1885, will be as strong in the future? If I were a consultant or an ordinary doctor, I would not feel that I was covered. I would not be insured by the MDU. Perhaps I would have cover but, if I have understood Dr. Saunders correctly, it would have to be determined by the union at a meeting at its discretion. Surely that would not be any good to me. Does Dr. Saunders believe the union has a future? I do not mean to sound cross.
I must declare an interest too — I used to be a member of the MDU. I am now a member of Medisec Ireland, the new IMO organisation. The consultants told the committee today that they would agree to an independent referee or mediator. It seems that the MDU would agree to that too. Perhaps that is the way to make progress. It is clear that something needs to be done because there seems to be a logjam at present.
Dr. Saunders has given the committee an indication of possible future liabilities. Does that cover neuro-surgery and other specialties which are considered high-risk? There may well be large claims in such areas in the future. I am interested in this area because the Government has had difficulties following its agreement to underwrite the liabilities of religious organisations ad infinitum. I am not drawing an exact parallel, but I wish to highlight the possibility that the taxpayer might end up underwriting a limitless pot. Does the union’s estimate of liabilities include areas such as neuro-surgery which are considered high-risk? We live in a litigious age. Does the union include certain high-risk areas in its estimations?
Dr. Saunders
I do not think one can say that this is discrimination. The board does not distinguish between English, Irish, Scottish and Welsh workers, or the few missionaries who practise overseas. The board examines groups of members as indicated by their demands on the total company. I was asked if I can break down the figures by postcode. I can do so, as it happens, but I do not know if it would be helpful. One would expect to find all kinds of variables.
I apologise if I misled the committee as regards the figures. The figures I mentioned are correct, but I intended to emphasise that the total available assets — €280 million, €290 million or whatever — meet the known liabilities, which amount to the same figure. If one examines the annual report, one will see that is the case. There is no €80 million surplus which I can divert specifically for this purpose. These are historic cases which have yet to come forward. Given that the average time lag in Ireland between an incident and a claim is approximately five years, it is likely that they will come forward for payment from 2009 onwards. They will continue to be paid for another 20 or 30 years. The payments will continue to have an impact in that time scale.
I can see the analogy made by Deputy Cowley with the case of the religious orders, but I do not think the two are the same. In the other instance, moneys are being paid as a consequence of deliberate criminal acts on the part of a minority within the religious orders. In our instance, we are talking about good men who are doing their best but——
My comparison related to the monetary end of it.
Dr. Saunders
——whatever they do, they get three cases per thousand.
The analogy was intended to draw attention to the potential for a bottomless pit in monetary terms.
Dr. Saunders
The taxpayer has always paid for these claims, in effect, by means of reimbursement or by means of the fees paid to doctors which translate into subscriptions. This is not something new for the taxpayer. It is interesting — this is a slight side issue — that reimbursement has stopped since this scheme was introduced. The IHCA cited a figure of €35 million. That money, which is now being banked, could be used to pay these claims as it has been historically.
The future of the MDU, about which I was asked, is one of insurance. It intends to resolve this matter on a contractual basis with its members so there will not be any question of what is covered and what is not covered. As I said, it is proposed to put it into large balance sheets, involving multi-international insurers. I do not claim that such insurers cannot fail, as newspapers occasionally demonstrate, but the risk would be significantly less. They would be subject to vigorous regulation by IFSRA and the liability would be reduced.
Does the union's estimate of liabilities include other high-risk specialties?
Dr. Saunders
It is not possible to save high-risk areas of practice from high-risk premiums, in the case of insurance, or high-risk subscriptions. Everybody paid the same amount when I joined a defence organisation more than 30 years ago. That the sum was just £35 shows how long ago it was. It was the same in England and Ireland. Colleagues are no longer able to bear that load because of differential salaries and incomes. Subscriptions, or premiums in the case of the MDU, are increasingly broken down along the lines of risk. It is also related to income because income, within a risk band, relates to the amount of work turned. It is not possible, therefore, to save high-risk groups from ever-increasing premiums. Time alone will tell whether they can afford it.
Such problems, with which the Department, to give it its due, is trying to grapple, can be dealt with by means of an across-the-board scheme which will inevitably lead to improved risk management and reduced risk in hospitals. High-risk areas would benefit if such a scheme were coupled with changes such as tort reform and no-fault compensation. There seems to be a willingness to implement such changes. The MDU met the former Attorney General, who is now the Minister for Justice, Equality and Law Reform, to try to conduct tort reform and a working group was established to consider no-fault compensation. Those who work in high-risk areas would be able to practise more affordably if such changes were made, but they are not within the gift of the MDU.
To what will that lead within the organisation?
Dr. Saunders
The board of the Medical Defence Union believes its duty is to pass the risk on to insurers and to concentrate on what we have done well historically, which is managing the claims on behalf of doctors and the giving of advice and support, not funding health services.
I thank the delegation for its presentation. A suggestion that has been made consistently this morning is that the joint committee should accommodate and move this issue forward. The best way to do this is when the Tánaiste and Minister for Health and Children comes to meet the joint committee in two weeks time to see what our agenda should be for the coming months. At the top of that agenda must be the resolution of this difficulty. We will make the suggestion that we appoint an independent chairperson to bring the two sides together to see what we can do.
The joint committee adjourned at 12.05 p.m. sine die.