I thank the Leader and all the groups in the House for their agreement to give the Bill a speedy passage. The House has agreed to meet on Monday to deal with Committee Stage and I very much welcome the House's support for the Government's efforts to ensure this legislation is enacted rapidly.
The Bill provides for the establishment on a statutory basis of a body to be known as the Personal Injuries Assessment Board. The establishment of the PlAB is one of the central aspects of the Government's insurance reform programme. Its objective is to tackle the delivery cost of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses alike.
It is widely accepted that litigation costs add, on average, in excess of 40% to the cost of compensation. This has contributed to the high cost of insurance in this country and to the cost of claims against the growing self-insured sector, including the State itself. These costs are a threat to the health of the economy, to job security and to our competitiveness in an enlarged European market.
By eliminating the need for litigation costs where legal issues are not in dispute, the PlAB will significantly reduce the cost of delivering compensation to the benefit of all consumers. The PIAB will offer a lower cost and speedier means of finalising genuine personal injury claims than the current litigation system.
The Government approved the establishment on a statutory basis of a Personal Injuries Assessment Board in March 2001 and, towards that end, the establishment of an interdepartmental implementation group to progress the establishment of the PIAB with an initial mandate to address personal injuries claims arising from employers' liability insurance.
The implementation group was set up in April 2001, comprising representatives of relevant Departments. The group reported in 2002. A specific commitment given in the Agreed Programme for Government in June 2002 had the practical effect of re-confirming the Government decision of 20 March 2001 to establish the PIAB. On 27 November 2002 I appointed the members of the interim board of the PIAB under the chairmanship of Dorothea Dowling and tasked them with setting up the board on a statutory basis. The board has contributed enormously towards shaping the proposed operating procedures reflected in this legislation and also in progressing the logistical operations required to set up the new body.
The primary purpose of the legislation is to establish the Personal Injuries Assessment Board as a statutory body. The board will be charged with the making of assessments, without the need for legal proceedings to be brought, of compensation for personal injuries. The role of the PIAB will be confined to claims where legal issues are not disputed by the respondent. The board will commence operations early in 2004 with employers' liability claims before encompassing public liability and motor accidents in mid-2004.
The priority of the board will be to implement fair procedures in accordance with the principles of natural justice as they apply in this "documents only" system of assessment. In the current legal system less than 10% of claims reach an oral hearing in court and the 90% that are settled without a trial are considered to carry an excessive litigation overhead. The objective of the PIAB is to assess compensation at current levels more expediently while eliminating the excessive litigation overhead. The PIAB is not being set up to reduce the level of awards to genuine claimants.
While parties are entitled to seek independent legal advice at any stage, the PIAB will not award litigation costs for or against any party but special provision will be made by the PIAB to protect the interests of vulnerable claimants. It will not conduct oral hearings. There are limited opportunities for respondents or their insurers to attack the claimant's claim once the case has been accepted as one appropriate for assessment of quantum only. The PIAB will avail of its own expertise on its staff or from appointed independent consultants to assess the validity of a claim and will not indulge in an adversarial process between competing parties' experts. Regardless of whether a claimant has employed a lawyer, the PIAB will always communicate directly with claimants so that they know exactly how their cases are progressing through each stage of the assessment process.
Assessment of general damages for pain and suffering will be based primarily on medical reports from the claimant's treating doctor but, in some cases, the claimant will be examined by a member of the independent medical panel established by the PIAB. A book of quantum will be compiled and published as a guideline to general damages for various categories of injuries and from which parties can satisfy themselves as to the reasonableness of PIAB awards. The existence of this guide should also assist parties in reaching negotiated settlements without recourse to litigation. The existence of a similar book of quantum in England may be reflected in the fact that only 4% of cases there involve barristers compared to their involvement in 70% of personal injury cases in Ireland.
Assessors in the PIAB will calculate allowable special damages for items such as wage losses and medical expenses on the same basis as the courts, taking into account the pending amendments to legislation on credit for collateral benefits received and compliance with tax legislation.
In contrast to the current adversarial system of personal injury litigation, the approach adopted by assessors in the PIAB will be inquisitorial. This means getting to the facts of the extent of the allowable claim and ensuring that the claimant gets that to which they are entitled – no more and no less. This approach will be of assistance to claimants on many issues where they might currently seek legal advice even in "assessment only" cases which do not involve legal disputes.
From the planned effective date, all relevant non-litigation cases, which would currently require the issuing of legal proceedings, will be subject to mandatory referral to the board before they can proceed to adversarial litigation. If the respondent wishes to dispute legal issues or has reservations about the genuineness of the claim, the board will immediately issue an authorisation for the claimant to proceed to litigation, if he or she wishes to pursue the matter further. At the end of the PIAB process, the parties are entitled to reject the award if they consider that they would secure a more favourable outcome through the court system.
The PIAB will issue an authorisation for the claimant to proceed to litigation within a specified time frame, if he or she wishes to pursue the matter further. During the PIAB process, time will not run against the claimant for the purposes of the Statute of Limitations on the period within which legal proceedings must be issued.
The Minister for Justice, Equality and Law Reform is preparing a civil liability and courts Bill, which includes a number of measures to tackle fraudulent and exaggerated claims within the court system. Among the other tasks which I have delegated to the PIAB is a cost benefit analysis of the current litigation system. While the interim board had hoped to progress that project, it was denied access to the relevant data without the statutory powers, which are provided for in the legislation.
I will summarise the main provisions of the Bill. Section 3 outlines the type of civil actions to which the legislation will apply. It is intended that the legislation will initially apply to employer liability claims only but will be extended in due course to cover motor accident, public liability and other types of claims. The PIAB will not deal with cases involving medical negligence nor claims for which a specific statutory scheme has been established, such as the Garda compensation scheme.
Section 6 makes reference to the fact that nothing in the legislation affects legal proceedings brought before the commencement of this section. The section also allows for parties to agree a mutually acceptable settlement at any stage during the PIAB process. Section 7 provides that nothing in the legislation affects a person's right to seek independent legal advice in respect of a relevant claim.
Sections 9 to 18, inclusive, deal with the PIAB application process from claimants covered by this legislation. Applications for assessment will be made in a prescribed form and accompanied by prescribed documents, such as a medical report from the claimant's treating doctor, copies of the original letter of claim and receipts in respect of outlays for which special damages are sought. Liability issues will not be raised by the PIAB. A claimant cannot bring court proceedings in respect of a personal injury claim without first going to the PIAB. The PIAB will notify the respondent of a claimant's application and ask whether the respondent consents to an assessment being made. If the respondent intends to dispute legal issues, then the PIAB will issue the claimant with an authorisation which will permit him or her to institute legal proceedings. Otherwise, the case will proceed to assessment.
In cases where there are two or more potential respondents, the PIAB process permits one of the respondents to allow the case proceed to assessment without prejudicing any of the respondents in any subsequent proceedings to seek an indemnity or contribution from other parties. A respondent's agreement to a claimant's submission for PIAB assessment will not constitute an admission of liability, nor will it be used in any other manner to prejudice legal arguments in subsequent court proceedings. The PIAB will have discretion not to proceed with a case which is more appropriate to the courts, for example, new medical conditions upon which there would not be sufficient legal precedent, or if it is of a particularly complex nature.
Sections 19 to 38, inclusive, deal with the assessment procedure. An assessment will be made by assessors employed by the PIAB on the same basis as an award of the courts, calculated by reference to the principles which govern the measure of damages in the law of tort and any relevant statutory provisions. Assessments will be made by reference to information and documents provided by the claimant. There will be no oral hearings. Assessors will make reference to the book of quantum in assessing general damages. Payments will be made by a single, once-off lump sum, as is the current position in the courts. In cases arising from fatal accidents, the assessments will state the amount to be set aside for each of the dependants of the deceased, but such cases will be subject to the ruling of the court.
The PIAB will have the power to levy charges. Funding of the PIAB will be primarily on a case by case fee, payable by the respondent, as the most transparent and equitable distribution of costs. Respondents will pay a standard administration fee as well as the costs of experts' fees necessarily incurred by the claimant, such as the cost of independent medical examination in certain cases. Claimants will pay a small, refundable administrative fee which must accompany their application to the PIAB if they have not been able to secure a satisfactory settlement directly. Claims will initially be made directly, in the usual way, against the respondent.
The PIAB will be able to request such information from claimants, respondents or third parties as is necessary to make an assessment. The board may initiate an examination of the claimant by a practitioner from the independent medical panel where the claimant's medical report is not comprehensive or conclusive, or where the claimant's medical condition is disputed by the respondent. The board will have the power to request from other bodies, excluding the Revenue Commissioners, such information as is necessary to properly validate losses claimed, as well as benefits received, which will be deducted from the assessment. This includes access to the national vehicle file recording the identity of the vehicle insurer for cases arising from motor accidents.
The board will also have limited powers to request from the Revenue Commissioners such information relating to the income of the claimant for the purpose of verifying any item of financial loss alleged by the claimant. The board will make special provision for vulnerable parties and will take steps to ensure the application process is straightforward and that PIAB staff will provide assistance to either party where required and explain the consequences of a party either taking or not taking a step during the process.
The board will issue details of the assessment to the claimant and respondent showing, separately, the amounts for special damages and general damages. Parties will be requested to reply within a specified timeframe as to whether they wish to accept the assessment. The claimant will have 28 days to decide whether to accept the assessment and the respondent will have 21 days. If a claimant neither accepts nor rejects an assessment within a specified period, the claimant will be deemed to have rejected the assessment. If the respondent fails to respond to the assessment within the specified period, he or she will be deemed to have accepted the assessment. This proposal is in line with the service of legal proceedings, where failure to respond within a specified period results in a judgment in default. If an assessment is not accepted by either party, then the claimant will be authorised to take proceedings within a specified timeframe if he or she so wishes. The acceptance of the assessment by both parties is binding on them as full finalisation of the claim.
These provisions also provide for a situation where there are multiple respondents and not all of them accept the assessment. Regardless of acceptance by the parties of the PIAB award in cases where the claimant does not have full legal capacity, a ruling is required by the court. Where the court does not approve the assessment, the claimant will be authorised to take proceedings within a specified timeframe. Nothing in the PIAB process is to prejudice any of the parties in any subsequent litigation. Where assessments are accepted, the PIAB will issue an order to pay to the respondent.
Sections 39 to 43, inclusive, deal with the legal status of an order to pay, which will have the same status as a court decree. Payments to a claimant, on foot of an order to pay, constitute satisfaction of the claimant's relevant claim. Part payments constitute partial satisfaction. Provision is also made to enable the injured party to receive the compensation to which he or she is entitled, leaving the apportionment of liability between potential co-defendants to be decided by subsequent litigation or negotiation, without prejudice to the right of the respondent or respondents. The discharge of a claimant's claim by the participating and accepting respondent will not prejudice that respondent's right in any subsequent litigation. The respondent may be seeking recovery of his or her outlay, in whole or in part, from another party who had a liability in respect of the accident which caused the claimant's injuries.
Section 44 allows that, in certain situations, the board may direct that where a claimant incurs an expense, this will be borne by the respondent. An example might be where a complicated medical condition follows an accident and updated medical or other experts' reports are required to reflect the full extent of the claimant's claim in terms of medical prognosis or the extent of financial losses. In such a case, the PIAB will direct that such expenses are necessarily incurred and are to be paid by the respondent.
Section 45 recognises that where a claimant lacks full legal capacity because of being a minor or of unsound mind, a ruling of the court is required and the claimant's legal representation will be directed to be paid by the respondent. Section 46 permits the board to make rules, which will be in separate regulations. These rules will outline the detail of the procedural operations of the PIAB, including the amount of fees to be paid by the claimant and the respondent. Section 47 provides for a claimant to withdraw his or her claim if he or she so wishes. If they do so, they may not make a fresh application or bring proceedings. This will be fully explained to claimants by PIAB staff.
Section 48 gives the PIAB the facility to make assessments on an ad hoc basis for cases where litigation proceedings have commenced, but where both the claimant and any other parties make a joint application for assessment. Section 49 provides for the making of assessments by the PIAB within specific time limits, unlike the current litigation system where no such target dates are set for completion of cases. Section 50 provides that the period from the date of application to PIAB and ending six months from the date of issue of authorisation to commence proceedings will be disregarded for the purposes of the statute of limitations period. Section 51 provides that PIAB assessments shall not be admissible in any subsequent proceedings unless the proceedings concerned are in connection with the enforcement of any assessment that is being accepted.
Section 53 provides for the establishment of the PIAB which, subject to the provisions of the Act, will be independent in the performance of its functions. Section 54 provides for the functions of the PIAB, including making assessments of relevant claims, preparing a book of quantum and carrying out a cost benefit analysis of the current system.
Sections 56 to 62, inclusive, provide for matters relating to the membership of the board and conduct of business by the board. The board will consist of members representing the interests of employees, employers, consumers and insurers, as well as the chief executive. The board will also include members with relevant expertise, such as in the legal and medical field.
Sections 63 to 66, inclusive, provide for the appointment of a chief executive office, the functions of the chief executive officer and the terms and conditions applying to the appointment of the chief executive officer. These sections further provide for the answerability of the chief executive officer to the board, the power of the chief executive officer to delegate functions to staff and the accountability of the chief executive officer to the Committee of Public Accounts and to other Oireachtas committees. The recruitment process is currently being progressed by the interim board.
Section 67 provides for the appointment of staff to the PIAB. Staffing numbers, grades and remuneration will be determined in consultation with the Minister for Finance. Section 68 provides for the setting up of a superannuation scheme in consultation with the Minister for Finance. Section 69 provides for indemnification from actions and claims arising out of members of the board or staff of the PIAB carrying out their functions.
Sections 71 and 72 provide for the disclosure of interests by members of the board and staff of the PIAB and also matters relating to such disclosure or non-disclosure. Section 73 provides that members of the board, or staff or consultants engaged by the board, shall not disclose confidential information without the consent of the board.
Section 76 provides that the chief executive of the board will keep accounts of the board's income and expenditure and submit estimates of same as required by the Minister. Section 77 provides for examination of the accounts and records of the board by any person appointed by the Minister in respect of any financial year. Section 78 provides that the board, as soon as practicable after the establishment day and within six months before each fifth anniversary, will produce a strategic plan. Such plans will comprise the key objectives, output and related strategies, including use of resources of the board.
Section 80 permits the board to engage consultants or advisers as it considers necessary for the performance of its functions. Section 82 provides that a member of staff of the board who is a lawyer may appear on behalf of the board in an application under section 27 or section 35.
The cost of PIAB will be covered by fees levied on respondents on a case by case basis at a standard minimum rate plus any actual outlay incurred on experts' opinions in more complex cases. Fees will be set with a view to the PIAB breaking even financially. PIAB fees payable by insured defendants will be covered by their insurance policy. An original proposal that the PIAB should be funded by a levy on the insurance industry was rejected by the interim board as this would merely be passed on to policyholders whereas the State and the self-insured sector will also benefit from the assessment service available from PIAB.
The annual running costs for the PIAB when fully operational were estimated at between €7 million and €8 million in the report of the implementation group set up to progress the establishment of the PIAB. Exchequer funding will be required to cover the establishment costs of the PIAB, estimated at €2 million in the implementation group's report. Cash shortfalls in the initial period of operation will be covered by Exchequer funding until the PIAB starts to break even financially. Exchequer funding requirements have been agreed in consultation with the Minister for Finance in the context of the annual Estimates process. Some €5 million has been put aside in the context of the 2004 Estimates but Exchequer funding beyond 2004 is not envisaged.
The establishment of the PIAB is a key element of the Government's insurance reform programme. Ireland's reform initiatives are being watched closely by the UK where the court reform programme introduced in 1999 has failed to reduce litigation costs and businesses there are now facing a growing insurance cost crisis. I am convinced the introduction of the PIAB as well as the other reform initiatives being undertaken by the Government will lead to a properly functioning market that will attract new entrants into the market and provide the much needed competition to drive premia down further. I commend the Bill to the House.