The provisions regarding the recoverability of certain social welfare benefits are now due to take effect from 1st August 2014. This provides for the repayment to the Department of Social Protection (the “Department”) by a compensator of payments made to a claimant as a result of the offending actions of a wrongdoer.
A compensator, or the Injuries Board if it is assessing, must apply to the Department for a statement of recoverable benefits prior to making any compensation payment. An application form has been drafted by the Department.
The statement of recoverable benefits will contain the total amount of recoverable benefits and is valid for 3 months from the date that it is issued. The compensator’s duty will be treated as discharged if he pays the amount stated in the statement.
Compromised Settlements/Multiple Defendants
Particular consideration will have to be given to these provisions where liability is apportioned or where a claim for loss of earnings is in dispute. If the loss of earnings claim is in dispute, so too will be the compensator’s liability to reimburse the Department for recoverable benefits. Unless there is a Court Order indicating that there was a split on liability or on the validity of a loss of earnings claim, the Department will expect full reimbursement of any benefit paid.
Where co-Defendants are liable for the compensation payment to the injured party, each Defendant is jointly and severally responsible for the payment, but the Department will accept each Defendant’s separate payment. It will be necessary for each compensator to set out to the Department the apportionment of liability between the Defendants.
Appeals and Refunds
There is an appeals process under the legislation but in order to bring an appeal, the compensator must first pay the total amount of recoverable benefits stated in the statement of recoverable benefits. Where, on appeal, it is found that there has been an over-payment, the Department will refund the compensator. If there has been an underpayment, the compensator will be liable to pay the difference as decided by the appeals officer.
It will inevitably lead to increased insurance costs as the insurer is now responsible for reimbursing the Department in respect of social welfare payments made to claimants.
It is likely that there will be demise in nuisance value settlements where there are significant recoverable benefits as it will no longer make economic sense for insurers to settle these claims.
Similarly, where co-Defendants are jointly and severally liable for the compensation payment to the Department, there will be added difficulties where a co-defendant is uninsured and impecunious. The insured Defendant in such circumstances will bear the full cost of the reimbursement of social welfare payments.
There will be an increased administrative burden in the processing of claims as each file will have to have a valid statement of recoverable benefits, whether or not a claim for loss of earnings is being made.
For further information, please contact Tríona Walsh, Solicitor Defence Litigation Unit.