Helen McEntee, the Justice Minister, has endorsed suggestions from experts that could have a favourable impact on compensation payouts for claimants with catastrophic injuries. Two reports from expert groups were released by McEntee on Monday, and she is currently working on the necessary legislations to implement their suggestions, which include utilizing periodic payment orders (PPOs) to resolve catastrophic injury cases.
PPOs offer a recurring annual payment to ensure lifelong care for the severely injured, serving as an alternate to one-time lump sum payments. These reports have been drafted by the Interdepartmental Group on the Indexation Rate for periodic payment orders, as well as the Independent Expert Working Group, which was established to advise on a suitable discount rate for catastrophic injury cases.
PPOs are seen as the optimum method of compensation, yet following a High Court ruling in 2019, claimants in catastrophic injury cases have been seeking lump sum payouts. The court argued that the legislation-provided indexation rate would lead to claimants being under-compensated due to its ignorance of wage inflation.
The indexation rate group suggested that the PPO indexation rate be determined combining the Harmonised Index of Consumer Prices (HICP) and the Annual Rate of Change (ARC) in nominal hourly health earnings. It added that the yearly payment of a PPO should consist of 80 percent of the average Annual Rate of Change in nominal hourly health earnings and 20 percent of the HICP.
With regards to the discount rate, it’s used by a court to discern the size of the lump sum award in a personal injury case, effectively compensating a person for future losses. This rate mirrors the likely return an award recipient would gain if the award sum was invested. The current rate as per a 2014 High Court ruling is 1 percent for future care costs and 1.5 percent for other financial losses. The Minister has agreed to maintain the discount rate as set by the High Court in 2014.
She has agreed to the suggestions that, within the context of severe injury cases, the plaintiffs should consistently be regarded as risk-averse and an expert panel should convene at least every three years to re-evaluate the discount rate. There was also the proposal to implement a “trigger” system that could prompt a reassessment of the discount rate, should there be a significant shift in economic conditions or if a court challenge is successful.
The Minister emphasised the significance of the work conducted by both groups, stating that these addressed a matter of “life-altering” magnitude for victims of catastrophic injuries and formed a key part of the Government’s efforts to reform insurance. Catastrophically injured survivors are entitled to compensation that is not only fair, but also ample enough to cover their medical requirements, the Minister noted. They believed Periodic Payment Orders (PPOs) to be the “optimum” choice to maintain this balance. The Minister added that the indexation group’s proposals would ensure that periodic payments could align with future inflation and healthcare cost changes.
The Minister endorsed the discount rate review group’s suggestion that there was no significant evidence supporting a change in the discount rates established in 2014. The Minister added that they were drafting the necessary regulations for setting future financial loss and care cost discount rates. These rates will undergo regular reviews and she is reflecting on the best method to initiate the recommended “trigger” system.
Solicitor Ernest Cantillon, who represents multiple severely injured plaintiffs, has welcomed the suggestions as a promising initial move towards securing sufficient long-term care for such plaintiffs. However, he also warned that further actions might be necessary to prevent under-compensation of some plaintiffs.