Act will empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders.
The Minister for Justice and Equality, Charlie Flanagan, signed the Commencement Order bringing Parts 1, 2 and 3 of the Civil Liability (Amendment) Act 2017 into operation with effect from 1 October 2018.
The primary purpose of Parts 1, 2 and 3 of the Act is to empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders. The Act addresses the concerns raised repeatedly by the courts about the absence of legislation to enable periodic payments orders in appropriate cases.
Speaking following the signing of the Order, the Minister said:
I am delighted to confirm that I have signed the Commencement Order bringing Parts 1, 2 and 3 of the Civil Liability (Amendment) Act 2017 into operation with effect from 1 October, 2018. The Act, which allows courts the power to award periodic payments in cases of catastrophic injury, will provide much needed financial security to persons requiring lifelong care and assistance following a catastrophic injury. It makes available to the courts the option of providing for a periodic payment to a catastrophically injured person rather than a lump sum payment. I believe that the availability of a periodic payment to catastrophically injured persons will ensure that they will receive the care and assistance they require for the rest of their lives.
Note to Editors:
The Civil Liability (Amendment) Act 2017 also contains important detailed provisions on the issue of open disclosure of patient safety incidents – Part 4 of the Act. A Commencement Order bringing Part 4 of the Act into operation was signed by the Minister for Health on 3 July 2018
The main purpose of Parts 1, 2 and 3 of the Civil Liability (Amendment) Act 2017 is to empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders (PPOs).
The Act:
- gives the courts power to award damages by way of periodic payments orders;
- sets out principles regarding the security of payments of PPOs;
- provides that PPOs shall be subject to annual indexation;
- amends 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 in cases involving PPOs;
- amends the Bankruptcy Act 1988 to protect a claimant's periodic payment award in the event of bankruptcy;
- amends the Taxes Consolidation Act 1997 to provide an exemption from income tax in respect of payments made to persons under a PPO; and
- amends the Civil Liability and Courts Act 2004 to provide for formal offers of settlement and costs in personal injuries actions involving PPOs
Periodic Payments
The measures in the Act 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 Department of Justice and Equality undertook an intensive policy analysis and consultation process with the Department of Finance, the Department of Public Expenditure and Reform, the Department of Jobs, Enterprise and Innovation, the Department of Health, the Office of the Attorney General and the State Claims Agency in the development of the Act. Representatives of the insurance sector and of the Personal Injuries Assessment Board were also consulted.
Currently, damages for personal injuries are paid by way of a lump sum. The damages awarded to compensate for personal injuries are intended to put the injured party in the same position as they would have been if they had not sustained the wrong for which they are now receiving compensation. Damages are assessed at a certain point in time and a lump sum is awarded which is intended to compensate for all past and future losses including the cost of care, medication, medical and assistive aids, and treatment. The lump sum is intended to represent the capital value of future loss.
The principal advantages of introducing periodic payment orders are as follows:
Inadequate compensation will be avoided, as payments will be tied to the actual rather than the expected cost of care and treatment.
Inappropriate compensation will be avoided, as payments will be linked to actual rather than expected duration of life.
In addition, the payment of enormous lump sums will be avoided.
Main provisions of Parts 1, 2 and 3 of the Act
Insertion of new Part in Civil Liability Act 1961
Section 2 of the Act 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 Act 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 Act 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 Act 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 Act 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.