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Proposed changes to provision of periodic payments in catastrophic injury claims

PRACTICE AREA GROUP: Healthcare
DATE: 16.09.2015

On May 27 2015 the government published the revised draft scheme of the Civil Liability (Amendment) Bill 2015. The bill introduces a new model to allow for the provision of periodic payment orders in cases before the Irish courts where a plaintiff has suffered catastrophic injury.

The bill sets out the circumstances in which a High Court trial judge is entitled to order that periodic payments be made by a defendant other than a state authority. It is anticipated that the bill will be enacted before the end of 2015.

Plaintiff representatives have expressed concern about the bill, particularly the proposal to link future payments to the Irish Harmonised Index of Consumer Prices. This index measures inflation over a broad range of consumer goods and will not accurately reflect the greater increase in wage inflation for carers' salaries or medical services. It is argued that this may result in plaintiffs being unable to meet the cost of future care, meaning that many will continue to seek lump-sum awards.

The attraction of seeking lump-sum awards for plaintiffs is partly due to the recent High Court decision Russell v HSE. The case indicated that awards for future special damages should only be discounted by 1% (previously 3%) to allow for the income that would be generated by a plaintiff who receives a lump sum to cover future costs. In effect, a plaintiff may receive a multi-million euro award in 2015 in respect of payments that may not need to be made until decades in the future. The discount is intended to reflect the fact that the plaintiff receives a benefit by being able to invest that sum of money until it is needed. Defence practitioners and many actuaries and economists argue that the discount should be significantly higher. The decision is under appeal and was heard by the Court of Appeal on July 7 2015. Judgment was reserved.

Written by Dylan Gannon, Associate, Healthcare Group.

This article first appeared in the International Law Office Healthcare and Life Sciences newsletter, 16 September 2015.

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