The Recovery of Benefits and Assistance Scheme has been in place for over one year now, having been introduced on 1st August 2014 by the Social Welfare and Pensions Act 2013 (“the Act”). Since that date, whenever a compensator intends to make a compensation payment to a plaintiff as a consequence of a non-fatal personal injury, the compensator must pay the Department of Social Protection (“the Department”) an amount equal to the illness-related social welfare payments that have been paid to that plaintiff as a consequence of that personal injury. There are six benefits specified under the legislation and in every personal injury action a Statement of Recoverable Benefits (“the Statement”) must be obtained prior to settlement to ascertain the amount of benefits which the plaintiff has received.
Reducing the Benefits Payable
When the scheme was introduced it was feared that it would bring about an end to the all-in or compromise settlement. Such settlements were of great assistance to both plaintiffs and insurance companies as a way of adjusting difficult cases, often without incurring significant costs. The Act states that the compensator must pay the amount of recoverable benefits specified in the Statement before making any compensation payment to a plaintiff. However, it also states in Section 343R(2) that where the recoverable benefits exceeded the amount of the relevant compensation payment and that payment was the subject of an order of a court or assessment by the Injuries Board, the compensator is only liable to pay the amount ordered or assessed. The relevant compensation payment was defined as any part of the compensation which related to loss of earnings or profits. Therefore, if the amount of benefits on the Statement exceeded the amount of loss of earnings specified in a court order, then only that lesser figure in the order had to be repaid to the Department.
As cases began to be listed for trial or settled in Autumn 2014, it became clear that most judges had no difficulty in granting orders on consent to the parties in an action reflecting either an agreement on liability which reduced the loss of earnings sum being paid or the fact that there was a reduced claim or no claim for loss of earnings being maintained. This had the effect of allowing the compensator to refund less than the amount on the Statement to the Department on foot of the court order, provided that the sum in the court order did not exceed the sum in the Statement.
The Department Responds
The Department has taken issue with this and has written in certain cases to the solicitors acting for compensators who seek to make a reduced payment as a result of a court order. It takes the position that Section 343R(2) only applies where a court makes an order having heard and determined the issues in the case and that this section has no application where proceedings are compromised by the parties. The words heard and determined do not appear anywhere in the legislation and the section clearly states that the reduced sum applies where the relevant compensation payment was the subject of an order of a court. In our opinion, the Department is incorrect in its interpretation of the legislation and until that legislation is amended, once a court is satisfied to grant an order (either on hearing a case or on the consent of the parties) then the order is valid.
Where the loss of earnings figure is nil or less than the amount on the Statement of Recoverable Benefits, a court order can be obtained reducing the amount which the compensator is liable to repay to the Department of Social Protection.