The Civil Liability (Amendment) Bill 2017
The Civil Liability (Amendment) Bill 2017 is an important piece of new legislation which will give necessary financial security to those who require lifelong care and assistance following a catastrophic injury.
The absence of a statutory alternative to lump sum payments in Ireland has meant that the best option for a tragically injured person, in the form of a periodic payments order (PPO), has not been available. Therefore, in many cases the lump sum payments can run out, leaving the injured party vulnerable.
This Bill empowers the courts to make award of damages in cases of catastrophic injury by way of periodic payments orders, therefore providing financial security for the injured person.
This is a much needed piece of legislation and I hope to see this Bill enacted as early as possible in 2017. However, there are a number of limitations within the Bill and I believe amendments may be necessary. I will elaborate further on this in my conclusion.
In addition to giving the courts power to award damages by way of periodic payments orders, the Civil Liability Bill will;
- set out principles regarding the security of payments of PPOs
- provide that PPOs shall be subject to yearly indexation
- amend the Insurance Act 1964 to provide that the limits on payments from the Insurance Compensation Fund where an insurance company becomes insolvent will not apply to PPOs
- Amend the Bankruptcy Act 1988 to protect a claimant’s periodic payment award in the event of bankruptcy
- Amend the Taxes Consolidation Act 1997 to provide an exemption from income tax in respect of payments made to persons under a PPO
- And finally, it will amend the Civil Liability and Courts Act 2004 to provide for formal offers of settlement and costs in personal injuries actions involving PPOs.
These measures stem from the recommendations of the report of the High Court Working Group on Medical Negligence and Periodic Payments (2011), chaired by Justice John Quirke.
The report was produced following an intensive policy analysis and consultation process involving various departments including the Department of Finance and the Department of Health. Additionally, representatives of the insurance sector and of the Personal Injuries Assessment Board were consulted.
The main provisions of the Bill:
Section 2 of the Bill inserts a new Part IVB (sections 51H to 51O) into the Civil Liability Act 1961 to make provision for periodic payments orders (PPOs) in catastrophic injury cases.
Section 51H defines “catastrophic injury” as meaning “a personal injury which is of such severity that it results in a permanent disability requiring the person to receive life-long care and assistance in all activities of daily living or a substantial part thereof”. The section also provides a definition of “activities of daily life” as including activities such as dressing, eating, walking, washing and bathing.
Section 51I is the central provision in the new Part IVB. It provides that where a court is awarding damages to a catastrophically injured person, it may order that all or part of the damages for future medical treatment, future care of the plaintiff and the provision of assistive technology be paid by way of a periodic payments order. In addition, where all parties are in agreement, damages in respect of future loss of earnings may be paid by PPO.
In deciding whether to make a PPO, the court must have regard to the best interests of the plaintiff. The court also must take account of the circumstances of the individual case, which include the nature of the injuries suffered by the plaintiff and the form of award which would best meet the needs of the plaintiff, having regard to the preferences of all the parties.
A court may order that a PPO will increase or decrease from a specified date by a specified amount (a “stepped payment”) to cater for anticipated changes in the plaintiff’s needs, such as entry into primary, secondary or third level education, reaching the age of 18 years or changes to the care needs of the person including transfer to residential care.
Section 51J provides that a court may only make a PPO where it is satisfied that the continuity of payments under the PPO are reasonably secure.
Section 51K provides that a paying party must make an application to the court where it proposes to alter the method of payment of a PPO. The court may make an alteration to the method of payment if the plaintiff consents and the court is satisfied that continuity of payments is secure and that the altered method of payment is capable of indexation.
Section 51L deals with the issue of indexation of payments. It provides for the adjustment on an annual basis of a payment under a PPO in line with the prevailing rate under the Harmonised Index of Consumer Prices. The section provides for a review of the application of the HICP after a 5-year period to determine its suitability for use in PPOs and, if necessary, for the specification of a more suitable alternative index by Ministerial regulations.
Section 51M provides that a PPO may not be assigned, commuted or charged without the approval of the court.
Amendment of Insurance Act 1964
Section 3 of the Bill amends section 3 of the Insurance Act 1964 to provide that the limit on the amount that may be paid from the Insurance Compensation Fund will not apply in cases where the court has made a periodic payments order. This means that if an insurance company became insolvent, the full amount due to a PPO plaintiff can be paid in full from the Insurance Compensation Fund.
Amendment of Bankruptcy Act 1988
Section 4 of the Bill amends the Bankruptcy Act 1988 to ensure that a claimant’s periodic payment order will be protected in the event of bankruptcy so that he or she will continue to receive the resources needed to cover necessary long-term care and medical attention and that such resources will not be available for distribution to creditors.
Amendment of Taxes Consolidation Act 1997
Section 5 of the Bill inserts a new section into the Taxes Consolidation Act 1997 to provide an exemption from income tax in respect of payments made to persons under a periodic payment order. In this way, PPOs will have the same tax exempt status as exists for lump sum payments for damages.
Amendment of Civil Liability and Courts Act 2004
Section 6 of the Bill amends section 17 of the Civil Liability and Courts Act 2004, which deals with formal offers of settlement and costs in personal injuries actions, to make provision for cases involving PPOs.
Suggestions for Amendment
Although I hope to see this Bill enacted as early as possible in 2017 I do see some limitations within the Bill which I would like to highlight for consideration.
The Bill only applies to catastrophically injured people. Catastrophically; meaning a personal injury which is of such severity that it results in a permanent disability to the person, requiring the person to receive life-long care and assistance in all 10 activities of daily living or a substantial part thereof.
Furthermore, a periodic settlement can be awarded unilaterally by the Court for costs of future care but can only be awarded for loss of future earnings if there is agreement between the parties.
As a result of these limitations a significant number of cases will still be paid by lump sum. In these cases, if the injured party lives for a long time with a permanent disability, it is almost inevitable that the lump sum award will run out. Consequently leaving the injured party in a very vulnerable position.
I would be in favour of a level playing field – an injured Plaintiff should be able to choose between a periodic payment and a lump sum in all large cases involving substantial special damages.
The Guernsey Melmot case is a case in point. Cases such as these have sizeable permanent loss of earnings as well as a lack of supporting dependants. Surely such cases ought to have the option of a fully periodic award which can provide for their long-term needs without the threat of the lump sum running out.
In summary, I think the current proposals are possibly too rigid. In my view, periodic payments ought to be available in all cases where the injured party would clearly benefit from them.
Furthermore, in my opinion there is no logic to allowing them future care costs while allowing a Defendant to veto a periodic settlement in respect of loss of earnings. The question must be asked; why should loss of earnings not be compensated by periodic payments routinely? We are surely familiar with old age pensions, permanent health insurance benefits and disability pensions – all of these are paid periodically. I am sure that insurance companies and the State Claims Agency want to restrict the use of periodic payments as much as possible and this Bill certainly does that – but should not we, as legislators, take a more balanced viewpoint and consider the various different options?
Taking these points into consideration however, this is a much needed piece of legislation. It will in many cases financially safeguard those who require lifelong care and assistance following a catastrophic injury.
Although as I have demonstrated, a number of changes need to be made to the Bill in order to reduce its limitations, I hope to see this Bill with my suggested amendments expedited.