Calls for reform of annual negligence compensation system

Lawyers for people who have suffered catastrophic injuries due to negligence are calling on the Government to urgently reform the legislation which provides for the periodic, or annual payment of damages.

Marian Fogarty, a solicitor with Cantillons in Cork, has represented a number of people who have suffered catastrophic injuries.

She said those who have a catastrophic injury often require 24-hour care and assistance with all activities that the rest of us take for granted in our daily lives and so they are very vulnerable members of our society.

Ms Fogarty said that in her experience, these injuries are often acquired as a result of sub-standard medical care and while no amount of money would ever compensate a plaintiff for such injuries, the compensation they do get is designed to help them live a "relatively normal" life, so far as they can.

There are two options open to plaintiffs seeking damages for such catastrophic injuries. They can either go for a lump sum award, where the damages are given in a one-off payment, or a periodic payment order, where an amount, which is indexed linked, is paid to the plaintiff annually for the rest of their lives.

Dr Shane Whelan, an actuary in UCD's School of Mathematics, wrote a policy paper on compensation for wrongful injury in Ireland.

He said the Periodic Payment Order is the ideal solution for plaintiffs as it gets rid of all the risks.

A plaintiff does not know how long they will live, Dr Whelan said, and a Periodic Payment Order means that however long a plaintiff will live, they will get an annual payment that is indexed linked for the rest of their lives.

Dr Whelan said this takes away the risk of plaintiff's running out of money later in life, and also the investment risks associated with lump sum payments.

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In other jurisdictions where such orders operate, the payments have been indexed linked to wages, but the 2017 Civil Liability Act linked the payments here to inflation, via the Harmonised Consumer price index.

However, the High Court said in Hegarty V The HSE in 2019, which Ms Fogarty was a solicitor on, that the law around Periodic Payment Orders was essentially a "dead letter" or unworkable because such an inflationary index had been used.

Dr Whelan said this is because plaintiffs would end up running out of money as the bigger costs for catastrophically injured plaintiffs are nursing care and care costs for the rest of their lives.

He said these costs are wage costs and that typically wages, over any long period in time, have gone up much faster than inflation.

An inflationary index therefore would under-compensate the plaintiff, Dr Whelan said, and the under-compensation would grow the longer they lived.

The 2017 Act does not allow Minister for Justice Helen McEntee to vary the indexation rate until at least October 2023.

Barrister Alan Keating, who deals with catastrophic injury cases, said the issue needs to be addressed as soon as possible.

He said this is an urgent matter as there is currently no effective periodic payment regime in place and the only way to make it effective and something that can be used by claimants is to change the index.

Mr Keating said changing the index can be done through amending legislation.

In a statement, the Minister for Justice said she does intend to address the issue by bringing forward necessary legislative amendments, enabling the Minister to make Regulations to set the indexation rate, and also by establishing an Inter-Departmental group to advise on an appropriate indexation rate.

However, Mr Keating, said a similar Inter-Departmental group had been established before the 2017 Act was drawn up.

He said that working group addressed the available indices which could be applied, and it rejected some of them, on grounds of policy rather than the purpose of a periodic payments regime, which he said should be the total cover for the annual cost of care.

Ms Fogarty agreed that the issue of Periodic Payment Orders needs to be urgently addressed.

She said there is always a concern that the vulnerable catastrophically injured plaintiff could run out of funds in later life with a lump sum settlement.

Lump sum payments are fraught with risk and uncertainty, she said, and the PPO is a more secure choice in most cases, provided that it is appropriately linked.