Periodic payments in catastrophic injury cases to increase with inflation

Periodic payments in catastrophic injury cases to increase with inflation

Periodic payments in personal injuries cases involving catastrophically injured people will increase with inflation under proposed new regulations.

The Department of Justice today published the reports of the interdepartmental group on the indexation rate for periodic payment orders and the independent expert working group set up to advise on an appropriate discount rate for use in catastrophic injury cases.

Most claimants in catastrophic injury cases have been pursuing lump sum payments as a result of a High Court ruling in 2019 which found that the indexation rate set out in legislation would result in under-compensation for claimants with periodic payment orders (PPOs).

The indexation rate interdepartmental group has recommended that the PPO indexation rate should be based on a combination of the harmonised index of consumer prices (HICP) and annual rate of change (ARC) in nominal hourly health earnings.

It says the amount of a yearly periodic payment payable should be based on a PPO indexation rate comprising 80 per cent of average annual rate of change in nominal hourly health earnings added to 20 per cent of the HICP.

Meanwhile, the discount rate independent working group has recommended that the discount rate should remain unchanged from the rate set by the High Court in 2014 and subsequently confirmed by the Court of Appeal.

Plaintiffs in catastrophic injury cases should continue to be considered as having a risk-averse profile, it added.

It also recommended that an expert group should meet at a maximum of every three years to reassess the discount rate, and that a “trigger” mechanism should be introduced to enable a review of the discount rate if there is a marked change in economic circumstances or if the rate is successfully challenged in court.

Justice minister Helen McEntee said: “I would like to thank both groups for their work on what is a life-changing issue for people who suffer catastrophic injuries, as well as an important element of the government’s work on insurance reform.

“Survivors of catastrophic injuries deserve compensation that is both fair and adequate to meet their treatment needs.

“Periodic payment orders are the most suitable option to achieve this balance, as payments are more closely tied to actual costs of care and treatment over a lifetime, rather than estimated costs and life expectancy.

“Payments on an annual basis, linked to an appropriate index rate, ensure recipients will always have adequate financial provision for their care, regardless of changing economic circumstances. This provides certainty for the recipient, their loved ones and for the State too.

“The proposals of the indexation group will ensure that periodic payments keep pace with future inflation and changes in healthcare costs. I have approved the recommendations of the group and work is underway on preparing the necessary regulations, which once signed, will facilitate the practice of settling catastrophic injury cases by way of periodic payment orders.

“I have also accepted the recommendation of the discount rate review group that there is no material evidence to justify a change in the current discount rates set by the High Court in 2014. Work has also commenced on prepared the necessary regulations to set the discount rates for future financial loss and future cost of care.

“These rates will be subject to periodic reviews and I am also considering the most appropriate way in which the ’trigger’ mechanism recommended by the group can be brought into operation.”

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