Check against delivery 

 

Second Stage Speech by the Tánaiste and Minister for Justice and Equality, 

Frances Fitzgerald TD 

Seanad Éireann 

 

Wednesday, 8 February 2017 

 

Cathaoirleach,  

 

I am very pleased to introduce the Civil Liability (Amendment) Bill in this House and I look forward to our discussion of its provisions here today. 

The purpose of this Bill is to empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders, which I will refer to for short as PPOs. 

The Bill will apply in cases involving both State defendants and non-State defendants. 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.  

At the outset, 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. Since the publication of the Working Group’s Report on this issue, my Department has been working with Government Departments, State Agencies and other stakeholders to develop the provisions of the Bill we now have before us.  

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 Working Group on Medical Negligence and Periodic Payments noted in its report that: 

“The lump sum approach dictates that there is no recourse for a plaintiff who exhausts his fund by exceeding his or her projected lifetime expectancy. Many catastrophically injured persons have spent their final years without the mean to pay for their care because the damages awarded have proved inadequate. Similarly, a defendant has no recourse if a large lump sum is paid to a plaintiff who succumbs to his or her injuries earlier than expected. The next of kin of some deceased plaintiffs have received unintended multi-million euro windfalls.” 

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. 

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. 

Since the publication of the report of the Working Group on Medical Negligence and Periodic Payments, the courts have made more than fifty interim periodic payment orders. These interim periodic payment orders are subject to review by the courts on relevant returnable dates. However, the courts have indicated that they do not favour settlement of claims by periodic payment order in the absence of legislation.  

This Bill provides that a court shall have 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. 

The introduction of this legislation will have a positive impact on persons with catastrophic injuries who require long-term care and assistance as it will ensure that they will have security with regard to the costs of care for their lifetimes.  

Before moving to provide the House with details of the provisions of the Bill, I wish to state that I hope to bring forward a number of Committee Stage amendments relating to the issue of double recovery of health benefits and also in relation to open disclosure provisions which deal with supporting the open disclosure to patients of patient safety incidents. My Department is working closely with the Department of Health on these matters. 

I will now outline briefly the provisions of the Bill. 

Section 1 of the Bill is a standard provision dealing with the short title, collective citation and commencement. 

Section 2 of the Bill is the main provision regarding periodic payment orders. It inserts a new Part - containing new sections 51H to 51O - into the Civil Liability Act 1961.  

Section 51H is an interpretation section for the new Part. Senators should note that “catastrophic injury” is defined 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”. This definition has been the subject of much discussion between my Department and other stakeholders.  

Section 51I is the central provision relating to the power of the court to award damages by way of periodic payments orders.  

Subsection (1) provides that where a court is awarding damages for personal injuries to a plaintiff who has suffered a catastrophic injury, 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 means of a periodic payments order. Where the parties agree to do so, damages in respect of future loss of earnings may also be paid by PPO. 

Subsection (2) sets out the issues which the court must consider in deciding whether to make a periodic payments order. 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. 

Subsections (4) and (5) deal with the issue of what is termed a “stepped payment”. A court may make provision that a PPO may increase or decrease from a specified date to cater for anticipated changes in the plaintiff’s needs. Changes in circumstances which may form the basis of a stepped payment include 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 deals with the vitally important issue of security of periodic payment orders. The section 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.  

Section 51L deals with the issue of indexation of payments. The section provides for the annual adjustment of a payment under a PPO in line with the prevailing rate under the Harmonised Index of Consumer Prices and also provides for a review of the application of that index after a 5-year period. 

Section 51M relates to the assignment, commutation or charging of a right to periodic payments. This section seeks to address the risk that if the right of commutation were not restricted, it could undermine the operation of the Bill, as a claimant could be encouraged to agree to commute their periodic payments order into a lump sum payment even if there were compelling reasons for the claimant to receive periodic payments. The section provides that if a plaintiff wishes to assign, commute or charge the right to a PPO, an application must be made to court for approval.  

Section 51N provides that a plaintiff or a defendant may appeal a decision of the High Court under section 51I, 51J or 51M to the Court of Appeal on a point of law only. 

Section 51O provides that the new Part will apply to proceedings that are brought on or after the commencement of the Part, or in respect of which no final decision has been made on the date of such commencement. I will examine carefully the wording of this section between now and Committee Stage to ensure that the new provisions on PPOs can apply to cases where a court has already made an interim award. If necessary, I will bring forward an amendment at Committee Stage to clarify this matter. 

I now turn to section 3 of the Bill, which amends section 3 of the Insurance Act 1964. Section 3 of the Insurance Act 1964, as amended, deals with payments from the Insurance Compensation Fund where an insurance company goes into liquidation. Subsection (4) of section 3 deals with the maximum amounts that may be paid from the Fund in the event of a liquidation of an insurance company. It provides that the total amount that may be paid out of the Fund in respect of any sum due to a person under a policy shall not exceed 65 per cent of that sum, or €825,000, whichever is the less.  

Section 3 provides that the limits specified in section 3(4) of the Insurance Act 1964 shall not apply where the court has made a periodic payments order. Consequently, where an insurance company becomes insolvent, the full amount due to a person entitled to receive payments under a PPO will be paid in full from the Insurance Compensation Fund.  

Section 4 of the Bill makes a number of technical amendments to the Bankruptcy Act 1988. The purpose of these amendments is to protect a claimant’s periodic payment award in the event of the claimant’s bankruptcy.  

Section 5 provides an exemption from income tax in respect of payments made to persons under a periodic payments order.  

Section 6 of the Bill relates to the issue of costs in personal injury cases.  

In conclusion, I believe that this Bill will make a material difference to the lives of people who have suffered catastrophic injuries by enabling the courts to give them much-needed financial security. I am also confident that the new measures can support catastrophically injured persons without imposing undue liabilities on insurance companies or other defendants. 

I commend the Bill to the House.