Medical Agency fees that included irrecoverable costs disallowed

Dempsey v Milton Keynes University Hospital – County Court at Liverpool – 4 December 2025

In an important judgment, HHJ Wood KC assessed at £NIL the agency fee element of Speed Medical Ltd claimed as fees for a medical report.

Case Summary

The substantive clinical negligence claim was settled by NHS Resolution without the need for formal proceedings. The claimant served a bill of costs in which the following were claimed as disbursements:

    26. Fee for Breach of Duty Report of Mr Jackson                                     £5,984.00 (exc VAT)

    27. Fee for Condition and Prognosis Report of Mr Jackson                      £3,225.00 (exc VAT)

    28. Fee for Psychiatrist Report of Dr Gibbons                                           £2,608.89 (exc VAT)

    29. Fee for Colorectal Report of Mr Jones                                                  £4,506.67 (exc VAT)

Vouchers from Speed Medical Ltd were served with the bill in support of these items. These were clearly not the fee notes of the medical experts, but requests for payment by Speed Medical Ltd for the cost of obtaining the reports.

Points of Dispute were served objecting to the fees on the basis that the claimant failed to serve copies of the fee notes of the experts in accordance with PD 5.2(c) to CPR 47. A breakdown showing the amount of the expert’s fee and the agency fee elements was requested.

In the Replies to Points of Dispute, the claimant refused to provide a monetary breakdown but volunteered the following information:

‘However, by way of full and frank disclosure, Speed Medical have confirmed that their invoice is broken down as follows:

• Expert fee
• Fixed operational fee – cost of the case handler etc dealing with the file
• Referrer commission- this is a commission fee if the law firm insist they want a separate agreement whereby a commission fee on instruction is paid to a third party marketing company usually (so the marketing agreement dictates what fee that is so varies with each firm/referrer)
• Finance fee – 6.5% pa for 3 years (we offer the 3 years deferred terms)
• Waive – the write off percentage a law firm requests so with each instruction they accumulate a fund in which they can utilise to partially reduce or fully write off any Speed medical invoice.

Speed profit costs – Expert fee under £1000 = 20% or £225 (whichever is the higher amount). Expert fee £1001+ = 20% capped at £600.’

The case proceeded to a provisional assessment at which the fees claimed were assessed. The defendant requested an Oral Review of the four items and served Part 18 questions in relation to the amounts claimed for each element of the items.

For each item, the claimant sent what was described as an ‘Itemised Medical Fee Note’ (‘breakdown’) setting out an amount for the expert fee and an amount for ‘Speed Medical Cost’. The breakdown provided a time illustration in arriving at the amount of the ‘Speed Medical Cost’. The footnote to the breakdown states:

“The above is a summary of the work undertaken in this matter based on the attached detailed listing. The time cost of work undertaken has been calculated using the pay band D, national grade 1 £141.60 (inclusive of VAT) hour, to illustrate the charges that would have been incurred if undertaken utilising the method of recovery or buy it had been undertaken by the instructing solicitors (sic). The actual fees charged based upon our standard fee basis model.”

At the Oral Review hearing, the Deputy District Judge assessed the items, accepting that the breakdown demonstrated that the time elements were reasonable and proportionate.

The Appeal

The defendant appealed on the basis that:

1. Where a claimant has obtained a medical report through a medical agency, the claimant must separately identify the sum claimed in respect of the expert’s fees and medical agency’s fees. They are distinct items and can only be assessed as such.
2. The claimant must comply with the requirement in PD47 paragraph 5.2(c) and provide a copy of the fee note(s) of the expert(s) for the expert’s fees to be properly evidenced.
3. Where the court is prevented from making a proper assessment of the components of the ‘composite fee’, the only just and proportionate approach is to disallow the recovery of the item.

Judgment

The court observed at the outset that it was unhelpful of the claimant to make no direct reference to the involvement of an agency when identifying the items. The court found that:

• The claimant’s reply to the objections and the subsequent approach was opaque.
• The replies and the breakdown provided a confusing picture to the court and created a real risk that in making an assessment, the court could be including three elements that were irrecoverable as costs inter partes.
• The assessment of the agency fee was frustrated by the opacity of material provided to the court.
• There was simply no adequate breakdown of the recoverable components of the profit costs of the medical agency. In these circumstances, it is appropriate to assess the agency element at £NIL.

Comment

NHS Resolution is aware of the considerable benefits of medical agency involvement in clinical negligence claims. However, where the fees claimed include irrecoverable elements they will be robustly challenged to ensure that only a reasonable and proportionate amount of recoverable costs are allowed upon assessment. This is an important judgment for several reasons:

1. Full particularisation of what is being claimed must be provided and evidenced. Absent this, referral fees, funding costs, and a hidden ‘slush fund’ (as DJ Baldwin called the ‘waive’) will continue to be systematically hidden and claimed as fees of a medical report obtained through an agency.
2. The amount for the expert fee must be separately evidenced from the agency fee.
3. Where the amount claimed includes irrecoverable elements, the amount for those elements must be identified and removed before assessment of the recoverable elements.
4. Where there is any risk of including an irrecoverable element in any amount allowed upon assessment, the court should disallow the fees.

Legal representatives are under a duty to disclose their client’s obligations under the CPR to medical agencies before confirming the terms of instruction of the medical agency. This includes the claimant’s obligation to disclose copies of the fee notes of experts under PD47 paragraph 5.2(c).

The judgment can be obtained through the following link:

Claire Kewin – Associate and Lead Lawyer (Costs)

Howard Dean – Partner and Head of Costs