Dáil Éireann Debate, Wednesday - 15 February 2023
159. Deputy Catherine Murphy asked the Minister for Health the funding set aside on an annual basis for contingent liability for the past ten years to date by the HSE; the way in which the amount is determined by the HSE; if the HSE carries out an actuary analysis for budgeting current and future contingent liability; and if the HSE conducts a risk assessment in the context of contingent liability. [7477/23]
View answer160. Deputy Catherine Murphy asked the Minister for Health the amount of funds set aside on an annual basis for contingent liability for the past ten years to date in 2023; the way in which it is determined the amount that is forecast to be needed for contingent liability; if he carries out an actuary analysis for budgeting current and future contingent liability; if he conducts a risk assessment in the context of contingent liability; and if he will make a statement on the matter. [7478/23]
View answerI propose to take Questions Nos. 159 and 160 together.
Financial accounting standards require an entity to recognise a provision for a liability if, and only if, a present obligation (legal or constructive) has arisen as a result of a past event (the obligating event), payment is probable ('more likely than not'), and the amount can be estimated reliably. By contrast, contingent liabilities arise where either there is uncertainty about the transfer of economic resources in relation to the obligation or where the amount of the obligation cannot be reliably estimated (or both).
Contingent liabilities are thus not provided for in the entity's Statement of Financial Position, or charged as an expense to the Statement of Income and Expenditure but are instead disclosed by way of note to the entity's accounts.
While there have been additional disclosures made in previous years in relation to a range of contingent liabilities within the HSE's annual financial statements, the main contingent liability noted by the HSE in its 2021 Annual Financial Statements (AFS) arose in relation to the settlement of clinical and non-clinical claims under the Clinical Indemnity Scheme which are handled on the HSE's behalf by the State Claims Agency.
The HSE reports its financial performance and position in line with the Financial Reporting Standard (FRS) 102, subject to a number of exceptions to the FRS102 standard which have been directed by the Minister for Health including an exception in relation to the reporting of clinical and non clinical claims by the State Claims Agency. The costs of clinical and non clinical claims being handled by the State Claims Agency on the HSE's behalf is met annually (by Ministerial direction) on a pay-as-you-go basis, and is accounted for as an expense as costs are incurred in the HSE's financial statements and under Subhead K.4 in the Department's appropriation account. As note 1 on Accounting Policies to the HSE's AFS details, the accounting treatment in relation to the claims being handled by the State Claims Agency is divergent from the FRS102 standard.
In relation to the potential future costs of claims, the State Claims Agency provides regular actuarial forecasts to the Department, projecting potential future costs of claims in the medium term. These forecasts are based on the State Claims Agency’s best current estimate of the ultimate cost of resolving each claim, including all foreseeable costs such as settlement amounts, plaintiff legal costs and defence costs such as fees payable to counsel, consultants, etc. Based on current actuarial estimates, the cost of such claims is expected to increase significantly in future years.
Addressing the incidence of claims under the Clinical Indemnity Scheme is a high priority for my Department, first and foremost from a patient safety and harm reduction perspective, with the secondary benefit of reducing the costs of such claims to the exchequer. The Patient Safety (Notifiable Patient Safety Incidents) Bill 2019 currently proceeding through the legislative process in the Oireachtas is one measure which, when enacted, is expected to improve patient safety and therefore reduce the costs of claims.
Additionally, on 31st January the Government approved the establishment of an Interdepartmental Working Group to examine the rising cost of health-related claims, with a particular focus on high value claims, to consider mechanisms to reduce costs. The Group’s considerations will include developing a plan to implement risk management and other initiatives to reduce the occurrence of adverse incidents and to recommend measures to address patient concerns following the occurrence of adverse incidents, taking into account measures suggested by Dr Scally in his final implementation review report. The Group will be chaired independently by an expert healthcare professional, Dr Rhona Mahony and will be comprised of membership from across key government departments and agencies. This is an important piece of work for patients and for the whole health service, and I look forward to engaging with the Working Group and working to implement the group’s findings and recommendations in due course.
