The Minister for Justice has accepted expert recommendations with positive implications for compensation payments for catastrophically injured plaintiffs.
Helen McEntee, who published two expert group reports on Monday, said she was preparing the necessary regulations to give effect to their recommendations, including for settling catastrophic injury cases via periodic payment orders (PPOs).
An alternative to lump sum payments, PPOs provide for ongoing annual payments aimed at ensuring the lifelong care needs of the catastrophically injured are met.
The reports are by the Interdepartmental Group on the Indexation Rate for periodic payment orders and the Independent Expert Working Group set up to advise on an appropriate discount rate for use in catastrophic injury cases.
While PPOs are considered the most appropriate form of compensation, claimants in catastrophic injury cases have been pursuing lump sum payments following a ruling by the High Court in 2019 that the indexation rate set out in legislation would result in under-compensation for claimants as it did not take account of wage inflation.
The indexation rate group recommended the PPO indexation rate should be based on a combination of the Harmonised Index of Consumer Prices (HICP) and Annual Rate of Change (ARC) in nominal hourly health earnings.
The amount of a yearly periodic payment payable should be based on a PPO indexation rate comprising 80 per cent of average Annual Rate of Change in nominal hourly health earnings added to 20 per cent of the HICP, it recommended.
In relation to the discount rate, a court, when making a lump sum award in a personal injury case, uses that rate to determine the size of the award necessary to compensate a person for future losses.
The rate reflects what an award recipient would likely receive if the award amount were invested. Following a 2014 High Court decision, the rate currently stands at 1 per cent for future care costs and 1.5 per cent for other financial losses.
The Minster has accepted the recommendation that the discount rate should remain unchanged from the rate set by the High Court in 2014.
She also accepted recommendations that plaintiffs in catastrophic injury cases should continue to be considered as having a risk averse profile and for an expert group to meet at a maximum of every three years to reassess the discount rate.
Other recommendations include for a “trigger” mechanism to be introduced to enable a review of the discount rate if there is a marked change in economic circumstances or the rate is successfully challenged in court.
The work of both groups concerned a “life-changing” issue for people who suffered catastrophic injuries and was an important element of the Government’s work on insurance reform, the Minister said.
Survivors of catastrophic injuries “deserve compensation that is both fair and adequate to meet their treatment needs” and PPOs were the “most suitable” option to achieve this balance, she said. The indexation group’s proposals would, she said, ensure periodic payments kept pace with future inflation and changes in healthcare costs.
The Minster accepted the recommendation of the discount rate review group that there was “no material evidence” to justify a change in the current discount rates set in 2014. The necessary regulations to set the discount rates for future financial loss and future cost of care were being prepared, she said. The rates will be subject to periodic reviews and she is considering the most appropriate way for the “trigger” mechanism recommended to be brought into operation.
Solicitor Ernest Cantillon, who acts for many catastrophically injured plaintiffs, said the recommendations were a “welcome first step” towards guaranteeing adequate lifelong care for such plaintiffs. Other steps may be necessary to ensure some plaintiffs are not under compensated, he cautioned.
