Personal Injury Claims Part 2

Personal Injury Claims Part 1 is available.

Should Ireland adopt the New Zealand system?

Perhaps. It has been seriously mooted in relation to medical negligence claims. No Irish Government has ever hinted at the possible adoption of the full scheme.

Should Ireland avoid such a system?

Possibly. The total number of injuries and illnesses, sustained at work, for 2003 was 100,700. Most of these involved absences from work for 3 days or less. Any scheme would mean that these people would receive compensation.

Were these 100,700 people compensated?

Probably not. It is very stressful to take proceedings in a court for any reason, including personal injury. Most people would forego the stress if they did not suffer a loss of earnings from the absence from work. In the absence of preparations to issue proceedings, insurance companies insuring employers practically never offered or paid compensation to injured workers.

Did the Irish Insurance Industry suffer losses due to claims?

Reputedly it did. However, the reports of such losses, and the attribution of responsibility to “high claimsâ€? reaches back a long way, at least to the mid-‘80s. The industry had blamed the use of juries in the High court for hearing personal injury actions with judges. It promised to reduce premiums if the juries were abolished. The Government complied and the premiums remained the same. In 1991, Dessie O’Malley the Minister for Industry and Commerce proposed a “Compensation Boardâ€? to determine “properâ€? levels of compensation for injured persons (in road traffic cases apparently). At that time there were many reasons for “lossesâ€? in the insurance industry besides “high claimsâ€?. An analysis by Business & Finance magazine based on the then current official statistics for the industry (published by the Government) showed that the average cost of road traffic claims settled by the insurance companies (with one exception) was under £2,500. Few personal injury cases would fall into this category; many property-damage-only claims would. This was evidence that the vast majority of the claims and the compensation paid related to those kinds of claims and not to personal injury claims. Then, as now, the cost of motor vehicles and their parts are relatively high in Ireland. This would go to explain any difference in premiums and claims costs for road traffic cases in Ireland relative to other jurisdictions. This is further supported by the fact that the European Consumers Group found, then, that Irish vehicle insurance premiums were double that of Germany, although the level of compensation for personal injury was about the same. No High court jury would ever have had an effect on property-damage-only claims. That’s probably the reason the premiums remained the same after the juries were abolished. That this view of Irish claims experience is correct receives validation from the ratio derived by H.W. Heinrich for accident analysis. For every serious accident there are many small accidents; for every small accident there are many near misses. See the diagram of the pyramid in this NASA strip.

Is there such a thing as the “Irish Insurance Industryâ€??

Arguably no. To insist there is, is to disregard the re-insurance industry. Above the retail insurer there are layers of insurers with whom the retail insurer lays off some, or even all, of the risk (and the premium). This re-insurance business involves some of the biggest insurance companies in the world. Inevitably they carry the biggest risks. The retail premium is not necessarily calculated solely by reference to the risk the insured represents; it must be calculated to ensure the pyramid of insurers stays in business. Therefore a big loss must be met by increased premiums. But that loss might occur far away, for reasons unconnected with the insured. Therefore an increase in premiums is not necessarily correlated with anything in the Irish economy, including Irish insurance claims experience.

How much does it cost to pay an insurance claim?

This may be a surprising question, but, in principle, the answer should be, say, “90% of the administration cost required to make the paymentâ€?. This would mean that most of the premiums paid are paid on claims and a small percentage is spent on administration and profit for the insurance company. In fact one estimate ((The Forensic Lottery; Terence G. Ison; Staples Press, at p. 210)) of the cost of administration in insurance comes in at 95.75% of claims paid out. So, only a tiny percentage of the premium is paid on claims and a huge percentage is spent on administration and profit for the insurance company.

How much does it cost to knock the eye out of a Londoner?

Currently, £35,000 (approx.) (€53,139.44). If you inflict a permanent limp on him it will cost £15,000 (approx.)(€22,774.04)

How does that compare with a Dubliner?

For him, the costs will be €100,000 (approx.) and €50,000 (approx.) respectively..

What is the explanation for these differences?

A thesis awaits its writing, but the easy answer is that Ebenezer Scrooge was British.

Nevertheless, is it not true that Irish compensation levels are relatively high?

Relative to what? In the USA compensation seems to be very high. In the UK it seems to be too low. In Germany it seems to be equivalent to Irish levels. The truth is that it is not valid to make these comparisons. In the USA a successful plaintiff must still pay his own legal costs, unlike in Ireland and the UK where “costs follow the causeâ€? and the losing defendant must indemnify the successful plaintiff for his costs. US juries take this into account in awarding compensation. In France a specially trained doctor assigns the injury to a category or type and assigns a degree of incapacity, whereupon a judge awards compensation on the basis of the category into which the injury falls. The court does not assess actual financial loss but awards an arbitrary figure. Of course none of these jurisdictions are constrained by provisions of the Irish Constitution, unlike Irish Governments and courts.

How many rich people have benefited from such compensation?

Rich before they claimed, or rich as a consequence? In Ireland, the Constitution states:
“Article 40
1. All citizens shall, as human persons, be held equal before the law.�

This means that wealth or poverty is irrelevant to a plaintiff’s claim for compensation for personal injury. Therefore it is not known how many rich people have successfully sued for personal injury. It could happen that a rich person is injured, particularly in a road traffic accident. Such a person is unlikely to be injured at work; rich people tend not to earn their living in dangerous occupations.
It cannot be correct to say of a person who receives €100,000 in compensation for the loss of an eye, that he has become rich. Plaintiffs who are awarded larger sums tend not to be able to enjoy the money because they are too badly damaged by the injuries for which they have been compensated.

What about the “compensation cultureâ€??

This is an urban myth, and a term of abuse and is, essentially, a denial of the right to vindication of bodily integrity under the Constitution. In fact it is rarely expressly used so openly. Being of indeterminate meaning it is often impossible to know if the speaker, in using the term, is denying the constitutional right to compensation or suggesting that it is a reference to fraudulent claims only. The Department of Constitutional Affairs in the UK has defined the phrase “compensation cultureâ€? as follows:
“The Government is determined to scotch any suggestion of a developing
‘compensation culture’ where people believe that they can seek compensation for
any misfortune that befalls them, even if no-one else is to blame. This misperception undermines personal responsibility and respect for the law and creates unnecessary burdens through an exaggerated fear of litigation.� ((see www.dca.gov.uk)). Nobody in Ireland has ever defended the making of claims in the absence of fault on the part of a defendant

Are there fraudulent claims?

Of course, there must be some. However, it is easy to misjudge the fumbling and bumbling of real life for fraud or wrongdoing. See this where the Supreme Court effectively recognised this.

Are these fraudulent claims undermining the “Irish insurance industryâ€? or some other part of the economy?

Most unlikely. It is essential to prove a personal injury in the course of a personal injury claim. Most such injuries are objectively real and easily seen by a treating doctor. No claim for personal injury will proceed far without some form of endorsement by a doctor. Furthermore, the circumstances in which the injury was sustained will have to be proved. This will usually involve corroboration of the plaintiff’s evidence by the evidence of other people. It is not easy to arrange such things as a fraud, although it is possible. As a crime it is deplorable, but as a social problem it is of insignificant importance.

What steps have been taken by the Government to tackle the “compo cultureâ€??

The Government has given no indication that it is simply trying to curb claims in the absence of fault. The courts system is adequate to do this. The Government, nevertheless, has introduced the Personal Injuries Assessment Board Act 2003 and the Civil Liability and Courts Act 2004. In each case the responsible Minister was Michael McDowell SC TD Minister for Justice Equality and Law Reform.

What are the effects of the Personal Injuries Assessment Board Act 2003?

It established the Personal Injuries Assessment Board, a body clearly corresponding to the intentions of Mr. Dessie O’Malley in his reference to such a Board in 1992. Briefly, injured persons must submit their claims for compensation for personal injury to the Board before they will be at liberty to issue proceedings in court if they, or the defendant are dissatisfied with the value assessed by the Board for their injury. The Board actively encourages the claimants to avoid lawyers. The running of time is suspended for the purposes of the Statute of Limitations after the Personal Injuries Assessment Board accepts the submitted claim details from the injured person. It is not suspended up to that point in time and commences running again after the Personal Injuries Assessment Board issues a certificate permitting the injured person to issue court proceedings.

What are the effects of the Civil Liability and Courts Act 2004?

The effects are:
a) The limitation period under the Statute of Limitations has been reduced from 3 years to 2 years for “personal injury claimsâ€?. This means that an injured person must issue proceedings in court before the expiry of 2 years from the moment time begins to run on his claim. Time normally begins to run on the date of the suffering of the injury. If the proceedings are commenced after the 2 years, a defendant may plead the Statute of Limitations and if successful in that plea will have the plaintiff’s claim struck out. If that happens the injured person will receive no compensation for the injury or any financial cost or loss.

b) A new form called a “personal injury summonsâ€? must be used to commence proceedings. The required contents of the summons have been prescribed in detail and essentially the plaintiff must plead all the factual circumstances of the accident and the medical consequences of the injury in detail together with all citations of legal wrongdoing by the defendant.

c) A claimant in a personal injury action must swear and file an affidavit verifying the matters in the claimant’s pleadings. In practice “claimantâ€? will mostly mean “plaintiffâ€? and not “defendantâ€?.

d) An injured person must, at risk of being penalised on legal costs, serve a letter of claim on an intended defendant within 2 months (usually) of the beginning of the accrual of the cause of action. (Normally the date of the injury).

What is the likely effect of these Acts on persons suffering personal injury?

The Personal Injuries Assessment Board Act 2003 has raised a new process for an injured person to go through to get compensation. If he uses the services of a solicitor to submit the claim to the Personal Injuries Assessment Board, the defendant will not be liable for the costs so incurred by the injured person. The injured person must pay for those costs himself. The effect is to introduce a practice like the US system, where no costs are awarded by the courts; each party pays only his own. The process, at the least, introduces a delaying feature into the recovery of compensation. The Personal Injuries Assessment Board actively discourages injured persons from using the services of solicitors. This is a disservice to the injured claimants; under the Civil Liability and Courts Act 2004 an injured person must serve a “letter of claimâ€? within 2 months of the accrual of the cause of action. This means the injured person needs the solicitor to draft that letter to comply with the Civil Liability and Courts Act 2004. Arguably, that letter will precede the application to the Personal Injuries Assessment Board.
The Civil Liability and Courts Act 2004 is much more inimical to the interests of injured persons than the Personal Injuries Assessment Board Act 2003. The requirement to fully plead the matters stipulated for the personal injury summons will normally mean the postponement of the date on which proceedings will be commenced. Taken with the shortening of the limitation period from 3 years to 2 years, many injured persons will be at risk of being caught by the expiry of the period and lose the right to compensation. The calculated effect of the provision requiring the service of a letter of claim within 2 months, at risk of suffering penalties on costs, will be to further approach the US system where each party pays his own costs (but without the US practice of assessing damages to effectively provide for the costs).

What about the reduction in fraud?

There has never been evidence of widespread fraud perpetrated by personal injury plaintiffs. It seems wrong that such fraud as there surely must have been (and probably still is) is should be tackled by treating all plaintiffs as if they are fraudsters, just to catch the few that probably exist.

Apart from persons injured in road traffic accidents and accidents at work, is there any other significant group of persons suffering actionable personal injury?

Yes. The Minister for Health and Children, Mary Harney, has confirmed that 100,000 patients (approximately) are injured (as in “personal injuryâ€?) by the Irish medical system annually.

Who is liable to compensate for those injuries?

Normally the Irish State in the form of the Minister’s Department or its agency the Health Service Executive.

Has the State found itself previously liable for multiple claims of personal injury inflicted on citizens?

Yes. The Department of Defence consciously decided not to purchase ear defenders for its soldiers on grounds of cost. The soldiers suffered foreseeable hearing loss and claimed compensation for the neglect of the Department. Also, the National Blood Transfusion Services Board was negligent and the State was obliged to establish a system of compensation for the claims arising from that neglect.

Will the shortened limitation period apply to any future cases against the State?

Yes.