Catastrophic Injuries – Lump Sum Payment an Overview

Most moderate injuries tend to settle down, if not disappear, within a few years. That explains why it can be easier to award a sum to compensate an injured party in a case and also cover his/her medical needs over a short one-to-two-year period.

Life changing or catastrophic injuries are a different scenario where a young plaintiff, for example, may need complex care pathways for the rest of their life.

To date, the system is to award a lump sum to cover general and special damages but also, critically, to fund the plaintiff’s ongoing care into the future. It is not unusual to see in the papers cases where awards of 10 or 15 million Euro are made to victims of either car accidents or medical negligence, given the high costs of nursing and specialist medical care in Ireland.

This lump sum award will be calculated by examining the plaintiff’s medical needs into the future as well as trying to specify how long the plaintiff will actually live. It is at best an inexact science and can throw up two different problems.

 Firstly, the plaintiff may live way longer than expected and run out of funds to cover his medical expenses and secondly, the plaintiff could unfortunately pass away long before their projected life expectancy and in that case they have been “overcompensated” albeit to the benefit of their families.

Some judges have got around these difficulties by making an interim award although these awards have to be fully adjudicated all over again after say a five year period. This is not unlike having multiple hearings over the plaintiff’s needs and has proved less than popular.

In 2015, a working group considered the better option of allowing judges to make periodic payment orders (PPOs). Essentially, PPOs mean that compensation is awarded to the plaintiff but on a periodic basis i.e. a specified monthly or yearly sum of money which would of course cease on the death of the plaintiff.

 PPOs were  established by the Civil Liability (Amendment) Act 2017, and judges were given the right to make these payments having considered amongst other matters “the best interest of the plaintiff”.

The court can also increase or decrease these payments if the life circumstances of the plaintiff change and trigger an increase in his/her care needs. Examples would be on turning 18, needing a car or going to 3rd level college.

 So why have PPOs not been university acclaimed?

 Two problems have unfortunately been identified with PPO’s.

1.  They are index linked to inflation with the Harmonised Index of Consumer Prices (HICP).
2.  Plaintiffs are unable to apply for a variation of their PPO’s.

Index linking

It is not sufficient to link PPOs with a consumer price index as earnings are not at all covered here. So, in a nursing situation, a carer’s earnings would probably increase faster than the HICP leaving the plaintiff unable to fund his nursing care as his money would buy him less and less care as time went on.

Not possible to vary PPOs.

There is no provision in the enabling legislation for any plaintiff to return to court to vary a PPO if his/her circumstances should unexpectedly change in the future. These are fixedpayment orders and plaintiffs can find themselves locked into a fixed payment that does not fully meet their evolving care requirements. These criticisms have not gone unnoticed, and a working group was established which reported in 2024 on, amongst other matters, an appropriate and fair indexation rate for PPOs.

The group recommended that the old reference to HICP be scrapped and replaced by a new rate made up of 80% of average annual rate of change in nominal hourly health earnings added on to 20% of the HICP.

In plain language, the inflation factor will now include healthcare staff earnings as well as the HICP and this will prevent any possible under compensation for catastrophically injured persons over their lifetime. These changes are clearly welcome, and regulations are now being finalised to implement them. Such changes will make sure that PPOs are more closely tied to the actual costs of care and treatment over a plaintiff’s lifetime providing much needed certainty to injured persons and avoiding the spectre of under compensation. Their introduction will hopefully revive the use of PPOs which had lapsed for a number of years owing to some of the difficulties outlined above.

It is not sufficient to link PPOs with a consumer price index as earnings are not at all covered here. So, in a nursing situation, a carer’s earnings would probably increase faster than the HICP leaving the plaintiff unable to fund his nursing care as his money would buy him less and less care as time went on.