The Civil Liability (Amendment) Act 2017 came into effect in October 2018, marking the formal introduction of the much anticipated Periodic Payment Order (PPO) in Ireland. Many of our clients have been in and out of Court settling for interim payments pending the introduction of the PPO. Unfortunately however, whilst PPOs are now available, they are no panacea and uncertainty and difficulties still exist for our clients, the Plaintiffs in these catastrophic injury cases.
Legislation allows for the Court, with or without the consent of the parties, to award damages by way of Periodic Payments for a Plaintiff who suffers a catastrophic injury, in respect of future medical treatment, future care, future aids and appliances, assistive technology and if the parties consent, future loss of earnings also.
The single biggest disadvantage under the PPO legislation is that 2017 Act provides that the indexation of Periodic Payments shall be linked to the annual rate of Irish Harmonised Index of Consumer Prices (HICP) Index as published by the Central Statistics Office. Briefly, the amount awarded under a PPO, under the new Legislation, will be inflated in accordance with inflation as recorded in an Index known as the HICP Index. Thus, if you have a PPO of say €100 to be paid to you every year, and if HICP increases by 2%, you will get €102 the next year.
SHORTFALL OF FUNDS FOR PLAINTIFFS
It is well established that over a prolonged period of time, wages will inevitably rise at a greater rate than increases in consumer prices. The net effect is that catastrophically injured patients receiving awards subject to a PPO face a significant shortfall in their monies they receive to pay for vital care.
We have engaged experts to look into this for our clients and they have done various studies which show that wage inflation and medical inflation are, on average, running by 1.5% above what would be contained in a HICP Index. (There is no separate index of wage inflation for healthcare workers). They have demonstrated that in the first year somebody gets 100%, but by year 10 they are only getting 86% of what they should be receiving. In crude terms, in that ten years, if you multiplied 10 x 1.5% of the lag, you have dropped about 15%. That continues throughout the period. Therefore, a Plaintiff who has a normal life expectancy, by the time he reaches it, will run out of money.
In the UK (pursuant to 29(a) and (b) of the Damages Act 1996) the Court has discretion not to apply the Retail Prices Index (the UK’s equivalent to the Irish HICP) and an Order for Periodical Payments may include provisions to dis-apply or modify the RPI.
REVIEW EVERY FIVE YEARS
The legislation provides that a review of the operation of the indexation and suitability of the use of HICP as the chosen index is to take place within five years after coming into operation of the Act and every five years thereafter. That review will be carried out by the Minister for Justice which tends to suggest that financial considerations and the cost of the scheme will carry a lot more weight than the consideration in respect of justice for the parties. Those that have their cases determined within the first five years are in effect test cases. If the review after 5 years shows (as is clearly the case) that indexation linked to HICP is inadequate, there is no provision for those people whose cases have been heard, to return to Court for an uplift in respect of the shortfall caused by the inappropriate application of an unsuitable index ( HICP).
STEPPED PAYMENTS / NO PROVISION FOR VARIATION
Presently, a PPO may contain a provision specifying that the payment will be from a specific date, increase or decrease by a specified amount. This is known as a “stepped payment”. Stepped payments are to be included where it is anticipated that there will be changes in the Plaintiff’s circumstances during his life, which are likely to affect his needs, such as reaching the age of 18 years or moving into residential care.
However, there is no provision within the present legislation for the Plaintiff to return to Court in the event of a deterioration in his condition.
RIGHT OF APPEAL ON A POINT OF LAW ONLY
Furthermore and remarkably in this writer’s view, under the present legislation, if a case proceeds to be assessed by way of a PPO and if assessment is made and one is dissatisfied, the Plaintiff only has a right of appeal on a point of law. In direct contrast, if one had proceeded to have the case heard by way of a lump sum and if the Plaintiff was dissatisfied, he or she is not confined to a point of law for the appeal.
It seems to me given all of the above, we cannot in all conscience recommend a PPO to our clients (unless life expectancy is short) on the basis that it is highly likely that the Plaintiff will not get 100% compensation. On the face of it, this would seem unconstitutional. What is 100% certain is that this PPO legislation will be tested in the Courts. Watch this space.
Contact us at Cantillons Solicitors at +353 (0)21 -4275673 or [email protected] if you would like more information.
* In contentious business, a solicitor may not calculate fees or other charges as a percentage of any award or settlement.