Approval of phased compensation plan welcomed

The Government’s approval of proposals for new legislation allowing the courts approve a system of phased payments to meet the lifelong care needs of catastrophically injured people has been welcomed as “a very significant development” by the president of the High Court.

“Periodic payment orders will transform the situation for the very seriously injured in ensuring their lifelong care needs will be met while also guarding against financial windfalls for relatives if people die earlier than expected,” said Mr Justice Nicholas Kearns.

A High Court working group had reported in October 2010 that legislation was necessary before the courts could make periodic payment orders (PPOs).

Under the existing system, successful plaintiffs are awarded lump sums based on estimates of their life expectancy, interest rates and investment returns but the PPO system provides for phased payments to meet needs over their lifetime.

About 12 serious cases which were settled had been “parked” for periods of up to two years in anticipation of the legislation and several judges had criticised the delay. A department spokesman would only say last night that they would proceed with “due expedition”.

Last October, Ms Justice Mary Irvine, who manages the High Court personal injuries list and chairs the Working Group on Medical Negligence and Periodic Payments, said cases could not be delayed any longer in the hope the Government would introduce the legislation as the delay was leading to substantial suffering.

A commitment to provide for PPOs was outlined in the programme for government and Minister for Justice Alan Shatter yesterday announced approval for his proposals to prepare legislation.

Lump-sum dangers

The danger with the lump-sum approach was it could lead to situations where a person is overcompensated or undercompensated, said Mr Shatter said. An appropriate and effective scheme of PPOs would address this issue “and further the interests of justice”. He said that while security of payment was not an issue where the State was liable, the matter was more complex in the case of private defendants, usually insurance companies, and required establishment of a financial infrastructure to ensure continuity of payment.