New law on payments for catastrophically injured ‘a dead letter’, court says

Judge says evidence show linking payments to cosumer prices would lead to undercompensation

Ms Justice Murphy said the expert evidence was that ‘no competent financial expert’ would recommend a perodic payment order  linked to the index of consumer prices to provide for future care needs of a catastrophically injured plaintiff. Photograph: Chris Maddaloni/Collins

Ms Justice Murphy said the expert evidence was that ‘no competent financial expert’ would recommend a perodic payment order linked to the index of consumer prices to provide for future care needs of a catastrophically injured plaintiff. Photograph: Chris Maddaloni/Collins

 

A new law aimed at meeting the lifetime care needs of catastrophically injured plaintiffs is “regrettably a dead letter” in its current form, a High Court judge has found in a significant “test case” judgment.

Ms Justice Deirdre Murphy said, because of “weighty” evidence that the linking of payments in the 2017 law to the index of consumer prices (HCIP) means such plaintiffs will be undercompensated, no judge could approve payments linked to that index.

The undercompensation arises because the bulk of awards are spent on carers’ wages, which generally rise faster than price inflation, with the effect catastrophically injured persons will, in the last years of their lives, be unable to pay carers.

Ms Justice Murphy said the expert evidence was that “no competent financial expert” would recommend a perodic payment order (PPO) linked to the index of consumer prices to provide for future care needs of a catastrophically injured plaintiff.

The court has jurisdiction to refuse approval for a payment order linked to the index of consumer prices and can assess an interim payment, lump sum or payment on account, she said.

It has no jurisdiction to fix a periodic payment order to a different index as only the legislature can do that, she held.

The law, in its current form, was thus “regrettably a dead letter” with the “one potential chink of light” arising if parties can agree on fixing a PPO to an index taking account of wage inflation.

Her judgment was given in a test case with implications for many catastrophically injured plaintiffs and for application of the relevant law, the Civil Liability (Amendment) Act 2017.

The Act, which commenced in October 2018 after years of calls for its introduction, provides for PPOs, payments designed to meet the care and therapy needs of plaintiffs over their lifetimes. A PPO is a full and final settlement but is paid out periodically.

Cerebral Palsy

The issues arose in the case of a four-year-old boy, a ward of court, who suffered a hypoxic brain injury in the immediate aftermath of his birth at a Cork hospital in late 2014, leaving him with cerebral palsy and requiring lifetime care.

Cork University Maternity Hospital, represented by the State Claims Agency, had admitted negligence.

An interim €1.6m settlement was reached in October 2016 and an assessment of the remainder of the boy’s claims was adjourned to last month.

Before that hearing, Cantillons solicitors, representing the child, engaged with the State Claims Agency about another interim agreement for a further three years in light of the child’s young age and uncertainty about his care requirements into the future.

The State Claims Agency’s position was that, because of the 2017 Act, it would no longer deal with catastrophically injured plaintiffs on the basis of interim payments but only on the basis on PPOs.

The president of the High Court, Mr Justice Peter Kelly, who manages the wards of court list, directed a preliminary hearing on issues concerning whether the courts can proceed other than by way of the statutory PPO insisted on by the State Claims Agency.

Such issues were arising in many cases and it was necessary to have them determined in this “test case”, he said.

Inerim payment

The issues went before Ms Justice Murphy who heard from a range of experts.

In her judgment, published on Tuesday, she found the 2017 Act does not oust the court’s inherent jurisdiction to assess damages for the boy’s needs for three years from October 2019 without imposing the PPO regime under the 2017 Act.

She held the best interests of the boy would be met by an interim three year payment, to be assessed in line with his care needs, rather than a PPO linked to the HCIP. In the interim, payments on account can provide for his needs, she said.

She noted, since these issues were fixed for hearing, the defendant had conceded, in the immediate term, the best interests of the boy were served by a further interim payment for three years for reasons including it was simply too early to assess his future medical and care needs.

However, the issue would raise its head again in three years and there was “overwhelming” evidence that indexation of periodic payments by reference to the HCIP will result in undercompensation of the boy, she said.

The “overriding concern” of an Inter-Departmental Working Group when opting for indexation linked to the HCIP was to avoid or minimise volatility in the amount of annual payments and to provide “as much certainty as possible” for defendants, she noted. It had rejected a wage based means of indexation as used by the courts in England and Wales when structuring PPOs.

She said, “regardless of policy concerns”, the court’s duty and obligation is to provide 100 per cent compensation to a catastrophically injured plaintiff.