The manner in which compensation is currently paid in Personal Injuries actions is under review. Victims of catastrophic injury are, at present, compensated by private parties (not State Claims Agency) the usual “lump sum” award which is intended to compensate for all past and future losses. This method of compensation has long been deemed inappropriate for compensating victims of catastrophic injuries for a variety of reasons;

  • It can be very difficult to calculate the future needs and life expectancy of an individual who requires ongoing care,
  • There is no recourse for a Plaintiff who may exhaust his/her fund by exceeding his/her life expectancy,
  • There is no recourse for a Defendant where a Plaintiff dies before the time originally projected. In these cases, the remainder of the lump sum passes to a ‘windfall’ for the Plaintiff’s family.

Under the existing “lump sum” system, legal representatives for both the catastrophically injured Plaintiff and the Defendant are required to produce expert reports detailing the Plaintiff’s life expectancy and the likely annual cost of providing the required support, e.g. nursing care, aids and appliances and medication. A “lump sum” is awarded based on these factors, with reference to interest rates and investment returns.

In addressing the concerns regarding the current system of compensation, the Working Group on Medical Negligence and Periodic Payments made recommended in this regard. In October 2010 the Minister for Justice Equality and Defence, Mr Alan Shatter TD, announced that the Government was approving proposals to prepare legislation to give the Court new powers to make Periodic Payment Orders in place of the existing “lump sum” system. Under the proposed regime, Periodic Payment Orders will provide for a series of regular payments to be made to an injured party, to meet their needs over their lifetime.

Of particular concern is ensuring the continuity of payments throughout the lifetime of the Plaintiff, notably if the Defendant is a private party/insurer. It is understood that Minister Alan Shatter is considering the necessary financial infrastructure to safeguard payments at present. Furthermore, the Department of Finance, through the State Claims Agency, has commissioned an actuarial study to examine the extension of a periodic payment scheme to non-State defendants which could potentially also apply to insurers based outside the State.

The Minister expects that the report of the actuarial study will be available ‘imminently’. He has confirmed that once the report had been received, final discussions on the shape of the Bill will be concluded by the Department with a view to early consideration by Government of the General Scheme and finalisation of the resultant Bill with a view to publication and enactment in 2014.