I am very pleased to introduce the Civil Liability (Amendment) Bill in this House and look forward to our discussion on its provisions. The purpose of the Bill is to empower the courts to make awards of damages in cases of catastrophic injury by way of periodic payments orders, PPOs. The Bill will apply in cases involving both State and non-State defendants. It addresses the concerns that have been raised repeatedly by the courts that the absence of such legislation has meant that the best option for a catastrophically injured person in the form of a periodic payments order has not been available.
I acknowledge the work that has been done by the High Court working group on medical negligence and periodic payments in bringing this matter to the fore. Since the publication of the working group's report on this issue, my Department has been working with Departments, State agencies and stakeholders to develop the provisions of the Bill before us. As Senators will be aware, damages for personal injuries are currently paid by way of a lump sum. The damages awarded to compensate for personal injuries are intended to put the injured party in the same position as they would have been in if they had not sustained the wrong for which they are now receiving compensation.
Damages are assessed at a certain point in time and a lump sum is awarded which is intended to compensate for all past and future losses, including the cost of care, medication, aids a person might need and treatment. The lump sum is intended to represent the capital value of future loss. The working group on medical negligence and periodic payments noted in its report:
The "lump sum" approach dictates that there is no recourse for a plaintiff who exhausts his fund by exceeding his [or her] projected [for example] life[time] expectancy... Many catastrophically injured persons have spent their final years... without the means to pay for their care because the damages awarded have proved inadequate... Similarly, a defendant has no recourse if a large lump sum is paid to a plaintiff who succumbs to his [or her] injuries earlier than expected.
This, of course, means that the next of kin in some instances have received unintended multi-million euro amounts.
The principal recommendation made in the working group's report was to address the deficiencies in the lump sum system by giving the courts discretion to impose, with or without the consent of parties, periodic payment orders in catastrophic injury cases. The working group recommended that periodic payment orders should be calculated to meet the cost of permanent and long-term care and treatment and should be index-linked. The principal advantages of introducing periodic payment orders include the fact that inadequate compensation will be avoided as payments will be tied to the actual rather than the expected cost of care and treatment; that inappropriate compensation will be avoided as payments will be linked to actual rather than expected duration of life; and that, in addition, the payment of enormous lump sums will be avoided.
Since the publication of the report of the working group, the courts have made more than 50 interim periodic payment orders. These interim periodic payment orders are subject to review by the courts on relevant returnable dates. However, the courts have indicated that they do not favour settlement of claims by periodic payment order in the absence of legislation. This Bill provides that a court shall have the power to award damages by way of periodic payment orders, where appropriate, having regard to the best interests of the plaintiff and all the circumstances of the case. It contains provisions regarding the security and indexation of periodic payment orders. In addition, the Bill will ensure periodic payment orders will not be subject to income tax and that such payments will not be taken into account in the event of bankruptcy. The introduction of the legislation will have a positive impact on persons with catastrophic injuries who require long-term care and assistance as it will ensure that they will have security with regard to the costs of care in their lifetimes.
Before moving to provide the House with details of the provisions of the Bill, I hope to bring forward a number of Committee Stage amendments relating to the issue of double recovery of health benefits and also in relation to open disclosure provisions which deal with supporting the open disclosure to patients of patient safety incidents. We are working closely with the Department of Health on these matters.
I will outline briefly the provisions of the Bill. Section 1 is a standard provision.
Section 2 is the main provision regarding periodic payment orders and sets out what we need to do to introduce them. Section 51H is an interpretation section for the new Part. Senators should note that catastrophic injury is defined as meaning "a personal injury which is of such severity that it results in a permanent disability requiring the person to receive life-long care and assistance in all activities of daily living or a substantial part thereof". As Senators can imagine, this definition has been the subject of much discussion among stakeholders.
Section 51I is the central provision relating to the power of the court to award damages by way of periodic payments orders. Subsection (1) provides that, where it is awarding damages for personal injuries to a plaintiff who has suffered a catastrophic injury, a court may order that all or part of the damages for future medical treatment, future care of the plaintiff and the provision of assistive technology be paid in periodic payments. Where the parties agree to do so, damages in respect of future loss of earnings may also be paid in periodic payments under the order. Subsection (2) sets out the issues which the court must consider in deciding whether to make a periodic payments order. The court must have regard to the best interests of the plaintiff, the individual circumstances, the nature of the injuries suffered by the plaintiff and the form of award which would best meet the needs of the plaintiff having regard to the preferences of all parties. Subsections (4) and (5) deal with stepped payments. A court may make provision that a periodic payment order may increase or decrease from a specified date to cater for anticipated changes in the plaintiff’s needs. Changes in circumstances which may form the basis of a stepped payment include entry into primary, secondary or third level education, reaching the age of 18 years or changes to the care needs of the person, which could include a transfer to residential care.
Section 51J deals with the vitally important issue of the security of periodic payment orders. The section provides that a court may only make a periodic payment order where it is satisfied that the continuity of payments under it is reasonably secure. The next section provides that a paying party must make an application to the court where it proposes to alter the method of payment of a periodic payment order. I have mentioned that these will be index-linked and the next section deals with the indexation of payments.
Section 51M relates to the assignment, commutation or charging of a right to periodic payments. This section seeks to address the risk that it could undermine the operation of the Bill if the right of commutation were not restricted, as a claimant could be encouraged to agree to commute their periodic payments order into a lump sum payment, even if there were compelling reasons for the claimant to receive periodic payments. The section provides that an application must be made to court for approval if a plaintiff wishes to assign, commute or charge the right to a periodic payment order. Various appeals are allowed.
Section 51O provides that the new Part will apply to proceedings that are brought on or after the commencement of the Part or in respect of which no final decision has been made on the date of such commencement. I will examine carefully the wording of this section between now and Committee Stage to ensure that the new provisions on periodic payment orders can apply to cases where a court has already made an interim order. As stated, approximately 50 of those orders have been made already and we want to ensure, if it needs further amendment to do it, that such amendment is brought forward on Committee Stage.
Section 3 amends section 3 of the Insurance Act 1964. Section 3 of the Insurance Act, as amended, deals with payments from the insurance compensation fund where an insurance company goes into liquidation. Subsection (4) of the section deals with the maximum amounts that may be paid from the fund in the event of a liquidation of an insurance company. It provides that the total amount that may be paid out of the fund in respect of any sum due to a person under a policy shall not exceed 65% of that sum or €825,000, whichever is the less.
Section 3 provides that the limits specified in the Insurance Act 1964 shall not apply where the court has made a periodic payments order. Consequently, where an insurance company becomes insolvent, the full amount due to a person entitled to receive payments under a periodic payment order will be paid from the insurance compensation fund.
There is a number of technical amendments to the Bankruptcy Acts. Section 5 provides an exemption, as I have mentioned, from income tax in respect of payments made to persons under a periodic payments order.
Section 6 relates to costs in personal injury cases.
People have spoken about the Bill for a long time. It is believed and understood that this is a far better way to approach these tragic cases. The Bill will make a difference to the lives of people who have suffered catastrophic injuries by enabling the courts to give them what is in effect much needed financial security that is based more on their needs, including emerging needs, than a projection into the future. The new measures can also support catastrophically injured persons without imposing undue liabilities on insurance companies or other defendants.
I commend the Bill to the House and hope Senators will support it.