In the recent case of Riedweg v HCC, the court addressed whether an insurer, sued under the Third Parties (Rights Against Insurers) Act 2010 (the Act), can bring a contribution claim against a third party also liable for the claimant’s loss. This issue can be applied to the healthcare sector when a patient brings a claim against a clinic for medical malpractice, and the clinic’s insurer is pursued for indemnity due to their insolvency.
In Riedweg v HCC, the claimant was an intended purchaser of a property that she alleged had been overvalued by a firm of valuers, who had since gone into liquidation. As a result, she brought a claim against the valuers’ professional indemnity insurers under the Act. The insurer then argued that the claimant’s solicitors had been negligent in advising on the purchase and applied to bring a Part 20 claim against the claimant’s solicitors in contribution.
Master Brightwell ruled that an insurer sued under the Act cannot claim a contribution from a third party, such as the claimant’s solicitors, who may also be responsible for the claimant’s loss. This is because an insurer’s liability under the Act is limited to indemnifying the insured, and not being directly liable for the same damage as the third party. The decision relied on the precedent from Bovis Construction, that insurers do not inflict damage and are not jointly liable with third parties for the claimant’s loss. Master Brightwell did however allow the insurers to appeal, recognising the issue’s practical importance and the lack of previous authority on this point.
This ruling is a significant one for healthcare providers and their insurers. For example, if a claimant were to sue a private clinic for medical malpractice, but the clinic is insolvent, the claimant could pursue the insurer instead as they are liable for indemnifying the clinic.
The insurer could argue that a third party, such as another hospital or clinician involved in the patient’s treatment, was also responsible for the harm, so they might seek to bring a contribution claim against that third party.
However, following the Riedweg decision, the insurer would likely be unable to do so given they are only liable for indemnifying the clinic, not for the harm the clinic has caused, which is different to that which the third party could be liable for.
The Riedweg ruling makes it difficult for insurers to recover costs from third parties under the Act. Healthcare insurers may face the financial burden of claims without the ability to claim contributions from other potentially liable parties. Going forward the Keoghs healthcare team will be considering potential ways to navigate this issue, however for the time being we suggest insurers are cautious in such situations and advise get in touch with the team should you have any queries.
Contact Claudia Dyer for more information
Claudia Dyer: Complex Paralegal - Healthcare
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