Private health group contributes £27m to Ian Paterson victim compensation fund

Around 750 victims of disgraced West Midlands surgeon Ian Paterson are to share in a £37m compensation fund, the healthcare body which used the consultant has revealed.

Spire Healthcare, which operates private hospitals and clinics in the Midlands where Paterson worked, said it had concluded an agreement in principle to settle all current and known claims against Spire Healthcare relating to Paterson’s actions.

The claims will be dealt with through the Ian Paterson (Liability to Private Patients) Compensation Fund.

Spire said the fund would provide compensation to approximately 750 patients currently bringing claims against it and provide a mechanism for dealing with any new claims brought before October 30, 2018.

The announcement saw a slight dip in the group’s share price, falling by 1.7% by the end of trading.

The new fund will be managed by the lead solicitors for the claimants. It will be funded by Spire Healthcare and its co-defendants (or, in the case of Ian Paterson, his insurers). Spire’s contribution will be £27.2m including a contribution to settle court costs.

The agreement is conditional upon the various parties agreeing, and the court approving, the terms of a formal Court Order which is expected to be considered by the High Court in October.

Once approved by the court, the order will conclude all current and known claims from patients against Spire Healthcare and its co-defendants, Ian Paterson and Heart of England NHS Foundation Trust.

Spire said Paterson’s actions, in both his NHS Trust and in the private sector, were unprecedented in terms of scale and impact.

The healthcare group said it was determined to learn the lessons from these events to ensure they could never happen again.

Spire’s contribution to the settlement will be paid out of cash reserves. The healthcare group’s primary layer of insurance, with RSA, has been materially exhausted, funding Spire’s defence costs to date, as well as claimants’ damages and costs in a limited number of claims settled prior to this provisional agreement being reached.

A further £10m of insurance may be available from RSA, depending on whether or not the various claims against Spire fall to be aggregated and treated as one claim under the terms of the RSA policy – something which Spire disputes. There is ongoing litigation between Spire Healthcare and RSA in this regard.

Spire Healthcare’s secondary layer insurer (which provided additional cover of up to £10m for any one claim and £20m in the annual aggregate) has indicated that it is disputing coverage. Spire is currently reviewing its options but it said it intends to use all legal means to pursue recovery.

However, meaningful progress is not expected to be made until the legal position on the primary layer is resolved.

For accounting purposes, Spire said in a statement to the markets that the settlement of the Paterson claims constituted an exceptional item on the balance sheet for the six months to June 30.

Simon Gordon, Spire’s interim CEO, said: “Earlier this year a criminal court decided that Paterson must bear responsibility for his actions, finding him guilty of assaulting a number of his patients. He behaved with clear criminal intent and abused the trust of those who looked to him for his care and relied upon his expertise.

“However, whilst nothing diminishes Paterson’s responsibility for his actions, these events took place in our hospitals, and this should not have happened. We accept that better clinical governance in the private hospitals where Paterson practised, as well as in his NHS Trust, might have led to action being taken sooner, and it is right that we have made a material contribution to the settlement announced today.

“We have apologised unreservedly to Paterson’s patients for their suffering and distress and we would like to repeat that apology. As soon as the criminal trial ended we were able to start liaising with claimants’ lawyers to broker a settlement involving all defendants. This has resulted in the agreement announced today.”

Paterson was found guilty in April of 17 counts of wounding with intent following a trial at Nottingham Crown Court.

In August, his 15-year jail sentence was increased by a further five years after the Appeal Court ruled the initial term was too lenient.