Compensation awarded to victims of work, road and medical accidents for their pain and suffering could double following an unprecedented five-judge hearing which began in the court of appeal yesterday.
The judges, headed by the master of the rolls, Lord Woolf, are expected to substantially raise the sums awarded by the lower courts in eight test cases, increasing some by as much as 100%. Their judgment will lay down guidelines which will boost awards in future cases.
The appeal court judges normally sit in threes, but five judges will sit for the first time because of the implications for thousands of cases each year. The judges are taking the step after a report by the law commission, the government's official law reform body, recommended a 50-100% rise in damages.
The outcome will not affect damages for loss of earnings and the cost of long-term care, which make up the bulk of £1m-plus compensation awards for the most disabled accident victims.
The judges will look only at the element which is hardest to compensate in financial terms - the effect of the victim's injury in terms of pain, limitations on bodily capacity and inability to enjoy leisure activities.
Damages for the most severe disability, such as permanent paralysis of all four limbs, are currently around £150,000 under informal tariffs set by judges. This could rise to £300,000.
Insurers say the result will inevitably be higher premiums for motorists and employers. The NHS litigation authority believes it could add hundreds of millions of pounds to the health service bill for outstanding liabilities, plus tens of millions a year.
Since the NHS is not insured, the money will have to come from resources which could otherwise be spent on patient care. Christopher Purchas QC, representing John Heil, one of the test case claimants, told the court at the start of the four-day hearing it was "irrelevant" that increases in damages would lead to much higher claims on insurance companies and the health service.
Mr Heil, a former police officer, suffered from post traumatic stress disorder after an incident with an uninsured driver and is unemployed after taking medical retirement from the force.
Mr Purchas said: "The amount of compensation that a claimant is entitled to receive does not depend on the financial standing of the defendant. It does not make any difference whether the defendant is a pauper or a millionaire, whether it makes him bankrupt or puts him into liquidation."
A claimant was entitled to have "full compensation" for losses caused by personal injury, Mr Purchas added.
He said: "We submit the reason why awards have fallen below the appropriate level is that no or insufficient allowances have been made for the change in economic circumstances and increases in living standards during the past 30 to 40 years."
The other test case claimants include two children who suffer from cerebral palsy because their births were negligently managed, and Tracy Kent, who was left brain-damaged after an ambulance took too long to answer a 999 call.
