On 27 May 2015 the Government published the much anticipated General Scheme of the Civil Liability (Amendment) Bill to provide for regular periodic as opposed to single lump sum payments in catastrophic injuries claims. The need for the introduction of periodic payment orders arises from a concern that the families of children with a catastrophic injury were suffering hardship after their original lump sum payment was spent. Payments at regular intervals, adjusted to the child's circumstances, are seen as preferable.
At the time the General Scheme was published, it was hoped that the legislation would be enacted by the end of 2015. However, one year on, the publication of the Bill itself is still awaited. The President of the High Court has recently said that it is "really shameful" the legislation has not yet been introduced. His comments came in the case of Jamie Patterson, a young boy with cerebral palsy whose parents were seeking a final lump sum payment to end the litigation. When questioned as to when the legislation will be introduced, the Tánaiste and Minister for Justice and Equality Frances Fitzgerald has said that she "fully expects further progress on the Bill in the coming months with a view, subject to Government approval, to Autumn publication."
The General Scheme of the Civil Liability Amendment Bill proposes to insert a new part in the Civil Liability Act 1961, giving courts the power to grant periodic payments to plaintiffs in catastrophic injuries claims. The main provisions are as follows:
- The making of a periodic payment order (PPO) will be at the court's discretion: The PPO may be awarded if both parties agree. However, where they do not, the court may grant the order if it is satisfied that it is in the plaintiff's best interests.
- Provision for a "stepped PPO": The court may provide for a "stepped" PPO, taking into account important foreseeable milestones in the claimant's life such as going to school, reaching the age of majority and anticipated changes in care needs.
- Payments must be secure: The General Scheme provides that a court may not make a PPO unless it is satisfied the continuity of payment is "reasonably secure." A PPO is considered to be "reasonably secure" where (a) the defendant is a State authority and the payments are protected by a scheme of indemnity administered by the State, (b) the court is satisfied that the PPO is eligible for payment from the Insurance Compensation Fund or (c) the defendant can provide evidence that it can guarantee the continuity of payment by some other means.
- Payments will be tied in with the Irish Harmonised Index of Consumer Prices: A PPO will be subject to an annual revision to cater for increases in costs. The rate attributable to indexation will be subject to an initial review within five years and thereafter every five years.
- Personal Injuries Assessment Board's (PIAB) role in PPOs: The General Scheme proposes amending the Personal Injuries Assessment Board Act 2003 to empower PIAB to award periodic payments.
There are many advantages to a system of periodic payments both for plaintiffs and defendants:
- Periodic payments are adjusted to care needs to ensure families are not under or over compensated. It is almost impossible for a lump sum payment, however carefully calculated, to precisely compensate an injured party.
- Under the lump sum approach there is no recourse available to the plaintiff who may exhaust their lump sum fund by exceeding their life expectancy. Similarly, there is no recourse for a defendant where the plaintiff passes away before the time originally projected. The PPO system provides for these situations.
- Periodic payments ensure continuity of payments to the plaintiff.
- Lump sum payments do not take into account a claimant's future personal circumstances, future investment returns and inflation rates.
However, some parties may prefer the traditional lump sum payment and there are disadvantages associated with the periodic payment system:
- Lump sum payments, as opposed to periodic payments, are conclusive and give the parties certainty.
- The catastrophically injured plaintiff would be required to undergo further expert examinations before each court visit in the case of periodic payments. In the periodic payments system, the indexation of awards is expected to be linked to the cost of living rather than the cost of care.
- The periodic payments system will require lengthy discussions and negotiations between medical and financial experts regarding future care needs and prognosis.
Some periodic payments have already been awarded by the courts due to the delay in legislating for the matter. This has been done on an ad-hoc basis with 38 periodic payments orders being made since 2010, whilst many other catastrophic injuries cases have been put on hold pending the publication of the legislation. In other cases judges have had no option but to award substantial interim or final awards which have led to a significant rise in costs. It is clear that the sooner the legislation can be enacted the better for all parties involved.