Can a negligent hospital dictate how its patient should spend the court-awarded compensation?

Suppose a hospital is negligent. The patient sues the hospital. The court awards compensation. Should the hospital dictate how and when the victim should spend the compensation money?

[1].  Sometimes tortfeasors make odd demands upon the courts

For example, some private hospitals are known to ask the court to hand over the compensation not to the victim’s family, but to a statutory body, e.g. the Public Trustee or ‘Amanah Raya’ as it is called.1I am grateful to Mr Manmohan Singh for pointing this out

[2]. The courts have no jurisdiction to make such an order

The first point in this debate is one of jurisdiction. The courts have no jurisdiction to award damages to be paid to the Public Trustee (‘Amanah Raya’). Click here for an article that explains this. 

[3].  Strong precedents have ruled that a ‘tortfeasor’ (party in the wrong) cannot dictate how the victim should spend her compensation

The compensation belongs to the victim. How the victim ought to invest the money, in which bank he should deposit it etc., is of no concern of the private hospital.

There are several reasons for this.

[4].  Any compensation awarded to the victim is on a ‘lump sum’ basis

Lord Lloyd of Berwick in Wells v. Wells ruled that in assessing a victim’s damages: ‘[The] task of the court… is to arrive at a ‘lump sum’ which represents as nearly as possible for compensation for the injury which the plaintiff has suffered”. 2[1999] 1 AC 345.

The Privy Council reaffirmed this principle in Dyland Simon v Manuel Paul Helmot. 3[2012] UKPC 5, at paragraph 10

[5]. Because of the ‘lump sum principle’, the courts will not award damages for the victim’s additional medical expenses

Take the 1701 case of Fitter v Weal.4(1701) 12 Mod Rep.542

A man called Weal assaulted Fitter. Having suffered injuries, Fitter sued Weal. The Court ordered Weal to pay Fitter £11 as damages.

However, Fitter’s injuries were more serious than he had initially thought. The injury required skull surgery. Fitter had to expend extra money. He sued the assailant for the extra expenditure. The court refused this request.

The court ruled that Fitter could not recover the sum for this additional loss. What was paid was a ‘lump sum’. Fitter could get nothing more.5 3 All ER 385.

[6].  There is no power to order that the victim’s compensation be paid ‘in instalments’

Wells v Wells was a House of Lords decision. The case ruled that the court does not have the jurisdiction to award ‘instalment’ or ‘structured’ payments.6 Ibid: see page 399 paragraph [a] to [b]

In the UK, section 2 of the Damages Act 1996 allows courts to order ‘periodic payments’ to be made to the victim, but only if both sides agreed.

Lord Steyn in Wells noted that: “[Such] agreement was virtually never forthcoming, [and that] the present power to order a periodic payment is a dead letter.”

Notably, there is no such Act in Malaysia.

[7].  The argument that ‘the Public Trustee must hold the compensation and pay the victim whenever she needs it,’ is based on a legal vacuum

That argument will lead to what is known as a ‘structured settlement’. It is a payment to be made as and when any future need arises.  In other words, it is an instalment payment plan.

For the courts to allow any ‘Public Trustee Order’ so that the Public Trustee may make payments to the victim in stages, is not sanctioned by the law.

In Wells, Lord Steyn discouraged any ‘structured settlements’. He said: “[This] is therefore not the place to discuss any other methods of compensation such as ‘structured settlement’.”7 See page 363 (f) of the judgement

[8].  In Malaysia, section 28A of the Civil Law Act 1956 is applicable. What is the consequence of this?

Section 28A is a Parliamentary formula. It is used for assessing damages for ‘personal injury not resulting in death’. 

Does this formula apply to medical negligence cases?  In February 2024, the Federal Court in Siow Ching Yee v Columbia Asia Sdn Bhd applied the formula.8[2024] 4 CLJ 173, see para [88] and [92] of the judgement

The formula caters for certain ‘discounts’. These ‘adjustments’ take into account the victim’s accelerated receipts of the lump sum, as opposed to any periodical payment.9 Dyland Simon v Manuel Paul Helmot, ibid, at paragraph 14

[9].  Incidentally, the formula in Sec. 28A, Civil Law Act 1956 is unfair and should be improved 

Section 28A was introduced in 1984 into the 1956 the Civil Law Act. The effect of this amendment was to cut down, drastically, any compensation awarded to victims. Lobbying by insurance companies was a substantial cause for this. The consumer had no voice to lobby for his or her needs. 

These anachronistic and unconstitutional compensatory formulae still sit, limpet-like, in the statute books, stuck in a time warp.  The time has now come to finally remove these statutory limitations.

At some point, some litigant is expected to complain that these Civil Law Act ‘limitations of liability’ for being unconstitutional.

That would be a fair argument. Why should one set of victims be paid less, while others get better treatment? That leads to inequality. And the law should not tolerate inequality.

[10].  What happens if the victim dies earlier – or later – than expected?

Suppose the victim requires future nursing care. In granting any compensation, the court must ‘factor in’ important issues, e.g. how long the victim will live (‘life expectancy’), any increased risk of infection, future surgery and medication, etc. These are all included in the sec. 28A formula. 

It is only after taking these ‘discounts’ does the court make a ‘lump sum’ award.

But what if the victim dies later than was predicted? Is it the law that the private hospital must pay the victim’s additional expenditure?

Conversely, what happens if the victim dies earlier? Must the Public Trustee return the remaining compensation to the private hospital?

The courts have long ago put a stop to these ridiculous arguments. They held firmly to the ‘lump sum’ test. For example, in Wells, Lord Lloyd ruled that the courts would not enter into ‘any further speculation’. 10 at p.  379 para E [/mgn]. 

[11].  Can the court appoint a ‘trustee’ on when, where and how the victim should deposit or spend his compensation?

The first source that the hospital’s insurer points to is the Public Trustee Corporation Act 1995. That this Act cannot be done is explained at paragraphs [5] in this article, here. We shall not oppress you its repetition.

[12].  Would the Public Trustee be able to act as the victim’s 24-hour Care Manager?

Even if that is the case, the Public Trustee must be prepared to act as the victim’s care manager.  A Care Manager traditionally tends to the victim’s every need, usually 24 hours a day. Such duties may well extend to several decades. Naturally, Care Managers need to be paid, and they cost money. Who will pay for these managerial costs?

One cannot expect the victim – or his family – to use the compensation to pay for that. Whenever a need arises to release some part of the compensation to the victim, the victim or his family cannot be expected to stand with folded hands at the Public Trustee’s office, begging for alms.

Third, the ARB cannot execute this function. It is simply not equipped to do it. THE ARB only levies a ‘service charge’ – which is not small. This expenditure will eat into the compensation, reducing the quantum of the compensation.

So this ‘ARB Trustee idea’ is impractical.

[13]. Will a private hospital be prepared to pay the extra costs of a Care Manager?

If private hospitals make that ‘ARB Trustee suggestion’ to the courts, then they must be prepared to pay for this additional managerial care. Would they be prepared to foot these extra bills?

And yet, ironically, most families of the victims carry out these duties for no charge at all. 

If, in a gush of altruism, the private hospitals do agree to foot these bills, medical health premiums will increase: that is economics.

Is this even desirable?

What is your view?

 

[The author expresses his gratitude to Ms KN Geetha, Mr Manmohan Singh, Miss Pavaani and En Basiir Kohar.]

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