Rebecca Ryan looks at the new claw-back procedure, in medical negligence proceedings. The new procedure enables the state to recover benefits paid to a plaintiff prior to resolution of a case where they have received illness benefit, partial capacity benefit, injury benefit, incapacity supplement, invalidity pension and disability allowance. Such benefits are only deductible if paid as a result of the injury claimed for. Further, the recoverable benefits can only be deducted from loss of earnings or profit, not general damages or other special damages.
Before settling a claim, the compensator must make an application to the Department of Social Welfare for a ‘statement of recoverable benefits’ in respect of the plaintiff. The department must provide this statement to the compensator within four weeks. It will also be provided simultaneously to the plaintiff. The statement is valid for three months once issued. The compensator must pay the amount specified in the statement to the department, which is then deducted from the amount of compensation paid to the plaintiff on resolution.
If there is a difference between the deductible benefits owed to the department and the loss of earnings claimed, a shortfall may occur. Although this situation would be rare, the compensator will need to be cognisant of the distinction between a settlement agreement and that of a court order. In the event of an order the claw-back owed to the department will be capped at the figure set out in the terms of the order. However, where compensation is agreed by way of a settlement agreement, the compensator must pay the full amount of recoverable benefits to the department regardless of the amount of loss of earnings or profit claimed. If the compensator fails to pay the specified amount, they will be liable to pay to the department on demand.
There is no retrospective effect on the new claw-back procedure, as such it will only apply after 1 August 2014. Deductible benefits are also capped at five years from the date the plaintiff first became entitled to the benefit. The 2013 Act also lists a number of situations where the new procedure will not apply, for example fatal injuries claims and any compensation payments made by certain compensation tribunals or redress boards.
The department is currently undertaking a consultation process and it is hoped this will provide further guidance in the coming months.