New law provides for periodic payments in cases of catastrophic injury
Minister promises law will provide financial security to persons who have been catastrophically injured and who require lifelong care and assistance
The Minister for Justice and Equality, Charlie Flanagan, this evening (Wednesday) announced that the Civil Liability (Amendment) Bill 2017 has now passed all stages in the Oireachtas.
Speaking following the passage of the Bill in the Seanad, Minister Flanagan said:
“I am delighted that the Civil Liability (Amendment) Bill has now passed the Houses of the Oireachtas. The Bill, which allows the courts the power to award periodic payments in cases of catastrophic injury, is an extremely important new piece of legislation that will give much needed financial security to persons who have been catastrophically injured and who require lifelong care and assistance. It addresses the concerns raised repeatedly by the courts that the absence of such legislation has meant that the best option for a catastrophically injured person in the form of a periodic payments order has not been available. It will ensure that people who have been catastrophically injured will receive the care and assistance they require for the rest of their lives.”
The Civil Liability (Amendment) Bill2017 seeks to address issues raised by the Working Group on Medical Negligence and Periodic Payments.
Minister Flanagan added:
“I want to acknowledge the work carried out by the High Court Working Group on Medical Negligence and Periodic Payments in bringing this matter to the fore. The principal recommendation made in the Working Group report was to address the deficiencies in the lump sum system by giving the courts discretion to impose, with or without the consent of parties, periodic payment orders in catastrophic injury cases. The Working Group recommended that periodic payment orders should be calculated to meet the cost of permanent and long-term care and treatment and should be index-linked. My Department has worked with Government Departments, State Agencies and other stakeholders to develop the Bill to address the deficiencies in current legislation and address issues raised by the Working Group. The passing of the Civil Liability (Amendment) Bill is the culmination of that work.”
The Bill grants courts the power to award damages by way of periodic payment orders where appropriate having regard to the best interests of the plaintiff and all the circumstances of the case. It contains provisions regarding the security and indexation of periodic payment orders. In addition, the Bill will ensure that periodic payment orders will not be subject to income tax and that such payments will not be taken into account in the event of bankruptcy.
Minister Flanagan also paid tribute to all of those who have been involved in bringing this complex project to fruition including those persons and organisations who have assisted the process by providing their expertise and the members of both Houses of the Oireachtas who have contributed extensively to debate and amendments as the Bill made its way through the parliamentary processes. The passage of the Bill represents a major development for people who have suffered catastrophic injuries and in the delivery system for compensation for them.
Note to Editors:
The Bill also contains important detailed provisions on the issue of open disclosure of patient safety incidents. Minister Harris will issue a separate statement on these aspects of the Bill.
The purposes of the Civil Liability (Amendment) Bill 2017 are:
- to empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders (PPOs).
- to provide for open disclosure of patient safety incidents.
- 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
- makes detailed provision in Part 4, as inserted at Committee Stage in the Seanad, for open disclosure of patient safety incidents.
The measures in the Bill 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 Bill. 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 the Bill
Insertion of new Part in Civil Liability Act 1961
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.
Open Disclosure of Patient Safety Incidents
Part 4 of the Bill deals with open disclosure of patient safety incidents.
Section 7 outlines the definitions of certain terms used in Part 4. The definitions of “health service” and “health services provider” capture the full range of public and private health services. A “relevant person”, in relation to a patient, is a person closely connected to the patient who may be present at an open disclosure meeting, or may receive the disclosure if the patient has died or is not in a position to receive the disclosure.
Meaning of “patient safety incident”
Section 8 defines the key concept of “patient safety incident”. The definition follows the accepted international classification and terminology used in the WHO Conceptual Framework for the International Classification for Patient Safety.
Open disclosure of patient safety incident
Section 9 provides that a disclosure of a patient safety incident made in accordance with the Bill will be considered an open disclosure.
Open disclosure: information and apology not to invalidate insurance; constitute admission of liability or fault; or not to be admissible in proceedings
Section 10 provides for protections for open disclosures. These protections only apply if the disclosure is made in accordance with the requirements of the Bill. The section also provides that insurance or indemnity will not be affected by an apology made as part of an open disclosure.
Statement in relation to open disclosure procedure and application of section 10 to information and apology
Section 11 provides that a health services provider must prepare a written statement outlining the procedure for making an open disclosure and the restrictions on the use that a patient may make of any information provided and any apology made at an open disclosure meeting.
Voluntary open disclosure of patient safety incident
Section 12 states that a health services provider may make an open disclosure regarding a patient safety incident. This section underpins the voluntary nature of the open disclosure process.
Making of open disclosure of patient safety incident by health services provider
Section 13 provides for who can make the disclosure on behalf of a health services provider. It will usually be the principal health practitioner involved in the patient’s care.
Time of making open disclosure
Section 14 makes provision for the timing of an open disclosure meeting.
Matters to be addressed by health services provider before making open disclosure of patient safety incident
Section 15 outlines the matters to be addressed by a health services provider before making an open disclosure.
Open disclosure meeting
Section 16 provides for the open disclosure meeting. It specifies the information to be provided at the open disclosure meeting and the manner in which that information may be provided.
Refusal, by patient or relevant person, to participate in open disclosure of patient safety incident
Section 17 provides for what happens when a patient or relevant person declines to participate in a proposed open disclosure meeting. It is important to note that there is no obligation on them to agree to participate.
Provision of additional information at additional information meeting
Section 18 facilitates the provision of new information that may become available after an open disclosure meeting. The protections in section 10 also apply to additional information provided under this section.
Clarification of information provided at open disclosure meeting and additional information provided at additional information meeting
Section 19 deals with requests for clarification of information provided by the health services provider. The protections in section 10 also apply to clarifications of information.
Records relating to open disclosure of patient safety incident
Section 21 provides that a health services provider must keep records of specified matters relating to open disclosures.
Savings and transitional provisions for this Part
Section 23 enables open disclosure of patient safety incidents that occurred or came to the notice of a health services provider before commencement of the Bill.