National Health Service Litigation Authority (Part 8 Claim - ASHE 6115 and the Second Reclassification), Re

Where a periodical payments order uses an index that has been reclassified, its recalculation formula must be interpreted consistently with the order’s purpose and drafting history. On a second reclassification, the baseline hourly rate is the previously recalculated rate, “AR”, rather than the original settlement rate, “A”. Using “A” would reintroduce earlier earnings growth, create an unintended windfall and compound the overpayment at each later reclassification.

A generic clarification may properly be made through Civil Procedure Rules 1998 Part 8 where there is no dispute of fact and the issue is common to numerous orders. Formal amendment of every existing order is unnecessary and disproportionate. Acceptance by the claimant or Deputy is sufficient, subject to registration of any objection.

The National Health Service Litigation Authority sought a declaration clarifying paragraph 6.1.3 of its template periodical payments order for care and case management. The issue arose from a second Office for National Statistics reclassification of ASHE 6115, the earnings index used for annual increases.

The earlier model order had been amended after a first reclassification. The Authority contended that, on a subsequent reclassification, the formula required the previously rebased rate, “AR”, rather than the original baseline rate, “A”. The application was brought under Part 8 because it involved no disputed facts and affected many existing and future orders.

1. Declaration granted. The court directed that paragraph 6.1.3 of the model periodical payments order be amended by adding that “A” is the numerical value of “AR” calculated when reclassification last occurred.
2. The court accepted that the existing wording was insufficiently clear when applied to a second reclassification. The formula had to be read in light of the intended mechanics of the model order. Applying the original “A” would rebuild earnings growth already reflected in the previous recalculation, producing an overpayment and compounding distortion. Applying “AR” gave effect to the intended single additional period of indexation.
3. The clarification was supported by the drafting history, the evidence of the financial expert involved in developing the model order, and the unanimous practical interpretation adopted by the relevant compensators. The amendment removed possible doubt and was fair and reasonable.
4. As with the earlier amendment, it was unnecessary to amend every existing order formally. That course would be costly, disproportionate and unnecessary. A claimant or Deputy need not register positive acceptance; an objection should be registered only where the amendment is not accepted as applicable.
5. The court observed that a person directly affected could challenge the declaration under Civil Procedure Rules 1998 r 40.9. It further observed that Part 8 is particularly apt for future generic procedural issues concerning the model order, because such proceedings can resolve common questions efficiently without requiring an individual claimant’s litigation to be used as a vehicle.