A Facelift for the Cosmetic Treatment Industry?

Berrymans Lace Mawer LLP partners Jim Sherwood and Greg McEwen write about the liability issues for insurers surrounding cosmetic treatments in an article published in Post Magazine.

More and more people (predominantly but not exclusively women) are choosing to undergo cosmetic procedures.  Now seen as more socially acceptable, there has been a dramatic growth in the industry, with breast augmentation remaining the most requested form of cosmetic surgery. 

The available options used to be limited to "going under the knife".  However, non-surgical cosmetic treatments, such as botox and dermal fillers, are a massive growth area. These are offered not only in clinics but in salons and dental surgeries, providing "lunchtime facelifts" on the high street.  According to market researcher Mintel, the number of non-surgical procedures in the UK rose from 950,000 in 2008 to 1.1 million in 2009.  Non-surgical treatments now account for more than 9 out of 10 cosmetic procedures.  But what happens when things go wrong?

From a product liability perspective, liability will focus upon consumer rights under the Consumer Protection Act 1987 (CPA), potential causes of action in contract or under implied terms as to satisfactory quality, and in negligence. 

A claim under the CPA is likely to target the producer of the product or the importer if the product originated outside the EU.  The aim of the EU Directive upon which the CPA is based is to provide a right of recourse for consumers against the producer/importer in respect of the safety of the product, regardless of any contractual claim. 

However, recent examples of dermal fillers and breast implants have exposed an additional consideration: the possibility that claims against manufacturers, even within the EU, may be jeopardised by those companies no longer trading and issues as to their insurance cover. Assumptions as to rights of recovery against a EU manufacturer may be misconceived and, as ever when providing product liability cover,  insurers need to look carefully at the supply chains involved. 

Contractual claims against product providers are likely to focus upon terms implied into a contract under the Supply of Goods and Services Act 1982.  While the test of satisfactory quality may be different to that of defect under the CPA, similar criteria apply whereby the safety and durability of goods are two of the considerations to be taken into account. 

Inevitably negligence may also be a potential cause of action, not least where knowledge of cosmetic procedures and potential issues with particular products may be in dispute.  In many cases, the question arises - is a particular adverse outcome due to clinical negligence, product defect or a combination of the two? The claimant may care little for such a distinction but for insurers and those who represent them it is very important.  Limitation periods, the presence or absence of strict liability and even the quantification of damages may well turn upon the nature of the claim.  Product manufacturers may argue that poor outcomes must be due to operator error.  The operator may well disagree, pointing to similar adverse outcomes experienced by others. 

Negligence is assessed according to the standards of a responsible body of practitioners within the appropriate field at the relevant time. However, rapid advances in the industry mean that which would have been deemed appropriate a few years ago might no longer beat the negligence threshold. As the state of knowledge advances, practitioners are expected to keep up. As new evidence comes to light about the risks inherent in certain treatments and products, both the practitioners and their insurers would be wise to take heed and adapt accordingly.

Having moved from the fringes into the mainstream, how can those involved be satisfied that these treatments and products are safe?  Regulation of non-surgical procedures remains patchy at best.  Only treatments involving surgery, lasers or intense pulsed light are formally regulated.  Where there is no formal regulation, as with most non-surgical cosmetic procedures, registration with the Care Quality Commission is not required. 

The Government requested the Independent Healthcare Advisory Service (IHAS) to produce proposals for a self-regulating industry framework.  In addition, individual professional bodies have in many cases issued their own guidance, although often in fairly broad terms.  Guidance from the General Dental Council states:

"Registrants choosing to offer Botox or other non-surgical cosmetic procedures should note that the GDC expects the same high standards of them, whatever the type of treatment they are carrying out.  In particular, they are advised to work within their knowledge and professional competence and be prepared to back up the decisions they make.  Careful thought also needs to be given to maintaining professional standards in relation to advertising these services, and the need to be indemnified."

The Medicines and Healthcare products Regulatory Agency (MHRA) administers the regulatory framework governing the supply and use of medicines, including botox However, dermal fillers, some of which are permanent, are classed not as medicines but as medical devices.  Regulation of medical devices is limited to the product meeting the appropriate European standard and qualifying for a European CE mark.  The British Association of Aesthetic Plastic Surgeons (BAAPS) wants dermal fillers to be treated in the same way as medicines, as in the US.  A recent BAAPS survey found that over 38% of its surgeons had seen patients in the previous year experiencing complications from permanent fillers and 23% reported patients requiring surgery as a result.

Recent events have illustrated that even where regulatory controls exist, rogue manufacturers can still circumvent production controls and introduce goods onto the market which do not conform to the approved specification.  The nature of a relatively new and fast evolving product knowledge is such that risks cannot always be avoided. 

On 24 January 2012, the Department of Health announced terms of reference for two reviews into the cosmetic treatment industry. The first, led by Minister for Quality Lord Howe, will seek to establish how events unfolded when the MHRA first became aware of the reported problems with PIP breast implants.  Over 40,000 women in the UK alone are believed to have PIP implants.  Lord Howe is expected to report by March of this year.

Looking ahead, NHS Medical Director Sir Bruce Keogh is leading a wider review into regulation of the cosmetic treatment industry.  The aim is to ensure that those who carry out cosmetic procedures have the appropriate skills and that those who undergo the procedures are given adequate information, along with appropriate redress if things go wrong.  One of the options being considered is an insurance scheme for the sector, similar to the ABTA scheme for travel agents.  The Government is also considering the introduction of a breast implant registry.  Professor Keogh is expected to report in March 2013.

In the meantime, those who indemnify product suppliers, importers and healthcare professionals will inevitably face some degree of uncertainty.  It is vital that they are fully appraised of their clients' businesses and potential liabilities.

The growing concerns regarding protection of consumers using the cosmetic industry is likely to fuel EC development of a uniform collective actions procedure across the EU. Following periods of consultation over recent years, the current implants saga is likely to spark renewed interest and enthusiasm to progress the access to justice agenda. 

One of the numerous targets of Government and media attention over recent weeks has been insurance cover available to providers in the cosmetic industry. The knee jerk reaction from Government has been one of surprise that providers do not have cover for the cost of removing allegedly defective or unsafe products. This exposes a misunderstanding of the cover involved, namely whether it be liability cover addressing situations where injury/loss may be caused by a product, or potentially recall or guarantee cover. The usual product liability exclusions may also be relevant while careful consideration must be paid to whether cover is actually triggered by the circumstances under consideration.

Similarly there may be issues where providers seek cover for product liability and clinical negligence respectively.  Where a single insurance programme is arranged, there is unlikely to be a gap in that cover.  However, it is conceivable that issues may arise where cover is agreed with different insurers and brokers need to be alive to the application of potential exclusions.   

Meanwhile, opportunities for underwriters will inevitably result from an evolving situation. Recent media interest has also focussed attention on developing medical knowledge and the availability of cellular rejuvenation techniques and stem cell storage.  No longer the stuff of science fiction, reports suggest that DIY kits will be available "over the counter" within years.

One certainty is that with the continued desire for a more youthful appearance and despite the current focus on questionable practices and lack of regulation, the industry will grow, buoyed by consumer demand. Insurers will see opportunities and must watch the current developments carefully to measure the potential risks involved. 

Jim Sherwood and Greg McEwen are partners at national law firm Berrymans Lace Mawer LLP.

Jim and Greg will be discussing this topic at our forthcoming Healthcare claims and Inquests update. Click here for more details about this event.

This article is not a substitute for specific legal advice and should not be relied upon as such.