Transcript SOME RECENT CASES - Action Against Medical Accidents

PERIODICAL PAYMENTS &
SOME RELATED ISSUES
HARRY TRUSTED
OUTER TEMPLE CHAMBERS
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PERIODICAL PAYMENTS
• Power derives from Damages Act 1996
and CPR pt 41
• Court has power to order PP’s (s. 2 (1) (a)
• Court must consider whether so to order.
• Court must consider needs of C (s 4.1.7a)
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Vulnerable Claimants
• If the Claimant is under a disability, the
Court must consider PP’s in the context of
any proposed settlement (PD 21.6 (4).
• Question is what form of award best meets
C’s needs (4.1.7 (a)
• Relevant factors include amount of
payments and parties’ preferences (PD
41.B)
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When is a PP award Likely ?
• Large claims.
• Long or uncertain life expectancy
• Expensive care/case management needs.
• Parental anxiety about the future.
• Relatively constant disabilities.
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Indexation of PP’s
• Key Issue.
• Damages Act s 2 (9) provides that the
Court can choose to uprate PP’s by an
index other than RPI.
• Historically, care costs have increased
much faster than RPI, which is a goods’
based index.
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Why the Fuss ?
• Assume C has lifex of 50 years.
• Care need of £100,000 p.a.
• Earnings index 1% more pa than RPI
• Differential about £1 million in today’s
money
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Claimant’s Perspective
• Costs of care relate to earnings not goods.
• If the differential between earnings and
goods is maintained, PP’s linked to RPI
will result in certain shortfall.
• Compensation should be 100% (Wells)
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Defendant’s Perspective
• The potential costs of earnings indexation
are exorbitant if C experts are right.
• Distributive Justice. Compensation
culture.
• In fact, C experts may be wrong because
the indices they support fluctuate and/or
do not mirror likely care costs anyway
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Flora v Wakom
• Application to Sir Michael Turner by D to strike out C’s
claim for earnings indexation of PP’s.
• Refused at first instance. Held, purpose of act was to
provide full compensation by PP’s. They would be “dead
in the water” if the Court could only use RPI.
• Court of Appeal upheld this. Anticipated
“basket” of case for appellate courts.
• Leave to HL refused.
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AvB
• Decision of Lloyd-Jones J. Oct. 2006
• D sought order that C should be given PP’s
uprated by RPI.
• C preferred a lump sum.
• Judge refused to force C to take PP indexed by
reference to RPI
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Thompstone v Glossop
• First case in which the indexation point
was argued.
• Earlier cases (eg Raphael v Norfolk HA)
settled on generous terms by D.
• Hearing before Swift J. involved earnings
and economic experts on both sides.
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D’s Case in Thompstone
• Lack of clarity about indices.
• NJC rates (similar to RPI) true guide to costs of
care.
• Distributive justice.
• Court should not have to choose an index. Up
to C to choose and persuade Court.
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C Case in Thompstone
• C was young child with lifelong care
needs.
• Likely that care costs would rise in line
with similar carers (ASHE index).
• 100% compensation meant that this index
should be used to uprate PP’s.
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Decision of Swift J in Thompstone
• Appropriate for Court to choose index.
• Correct index was matching percentile of ASHE.
• RPI was not a measure of earnings but of costs
of goods.
• Distributive justice did not displace 100%
• Leave to appeal.
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Corbett v S Yorkshire HA
• Broadly similar arguments as in Thompstone
• D did not call economic evidence re. distributive
justice, but the point was argued.
• Claimant won on indexation and care issues.
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OTHER RECENT CASES
• RH – decision of Mackay J. Future care
costs provided by PP’s linked to earnings.
• Sarwar – future costs of care and earnings
provided by PP’s linked to earnings.
• Ure – future care provided by PP’s linked
to earnings. RTA insurer.
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The Appeals
• Four cases heardy by CA in November
2007. Thompstone, RH, Corbett, De Haas.
• Permission given at first instance.
• The “basket” envisaged in Flora
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The Main Issues on Appeal
• Statutory Interpretation (what powers does
the court have ?)
• Attack on discount rate ?
• Distributive Justice
• Strengths/Weaknesses of RPI
• Strengths/Weaknesses of ASHE 6115
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Statutory Interpretation
• Defendants say that S 2 (9) only allows
the Court to “modify” the RPI. So it does
not allow for application of a different
index.
• Claimants say that S 2 (9) provides for
modification of the effect of S 2 (8). So
Court can use any index.
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An Attack on the Discount Rate
• Defendants say that in Cooke (and other
cases), claimants tried unsuccessfully to
reduce discount rate because costs of
care would rise faster than inflation.
• Therefore, by seeking to link periodical
payments to earnings costs, claimants are
trying to subvert Wells v Wells
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Claimants’ Response
• If Claimant has a lump sum, there is a
chance of investing to “beat” the 2.5%
discount rate. In parliamentary debates,
this was expressly discussed.
• But with a PP, Claimant is stuck. There is
no chance of doing better than the RPI,
which will probably be insufficient.
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Distributive Justice (D)
• Defendants (all health authorities) say that
if periodical payments are uprated by
reference to earnings, PP’s will be more
expensive to provide.
• This will reduce the money available for
patients in the NHS.
• And it will create unfairness between
different classes of litigant. In a few
cases, insurers may not be able to provide
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PP’s
Distributive Justice (C)
• Claimants note that Defendants’
submissions support the argument that
PP’s will be more valuable if earnings
linked.
• Hence C will lose out on RPI.
• The actual cost to the NHS is probably
insignificant in terms of patient care.
• If C runs out of money, more care to be
provided by NHS.
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Distributive Justice (C)
• In some cases in which the courts have
applied this principle, financial loss has not
been involved (Heil).
• Or, if it has, the question is not whether
the claimant should get a part of his loss.
It has been all or nothing (Alcock, White).
• Here, PP’s will be a disaster if C runs out
of money.
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RPI - Strengths
•
•
•
•
•
Established in 1947.
Well known to all.
Big, broad-based index.
In Section 2 (8).
Easy to calculate and use.
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RPI - Weaknesses
• Measures (almost entirely) costs of goods
not services.
• Care costs account for well under 1% of
index.
• As a matter of record, has not reliably
tracked care costs.
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What is ASHE ?
• Annual Survey of Hourly Earnings.
• Many different sectors of the economy.
Takes 1% sample of all PAYE employees.
Data available from NES since 1974 and
in present form since 2004.
• Information published relating to different
groups. ASHE 6115 is care workers.
• Also “ASHE Median”, which is an average.
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Advantages of ASHE
• Can be used to choose a group of workers
(eg 6115, care).
• Can be further refined to track a group
within the cohort whose earnings match
the claimed need (x’th percentile).
• Occupational specific.
• Probably the most accurate tracker that
can be obtained.
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Disadvantages of ASHE
• Recent. Available as consistent series
since 1998 only.
• Constitution of groups may change.
• Recent volatility.
• No separate measures of overtime pay
etc.
• Differs from National Joint Council rates.
Debate about why this is so.
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Submissions from MOD
• If earnings indices used, more claimants
will seek PP’s.
• If so, MOD no fault compensation scheme
will be harder to administer.
• MOD and other compensators will be
forced to pay PP’s but insurers who are
not “secure” will not.
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Submissions from MPS
• MPS is not a “secure” insurer.
• So it cannot be forced to make PP’s.
• MPS contends that if PP’s are earnings
linked : • Harder to find a suitable secure product.
• More expensive (ie GP premiums rise).
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The Court of Appeal Hearing
• The Court indicated that it considered
itself bound by Flora v Wakom so far as
issues of statutory interpretation and
distributive justice were concerned.
• These issues are likely to go to the House
of Lords.
• The CA may give guidance about the
powers of a judge to impose PP’s.
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Practical Implications of PP’s
• Be aware that PP’s must be considered in any
big claim.
• Court will probably refuse to approve settlement
unless parties can persuade it that PP’s have
been discussed.
• Cases are now being settled on the basis of
PP’s at RPI with indexation issue to be
reconsidered once appellate courts have dealt
with “basket”.
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The Single Resident Carer
• Arose in Corbett because D wanted a
“live-in carer” who would be paid for 13
hours, relieved for 3 hours, sleeping for 8
hours.
• Issue was whether or not this would have
involved a breach of the Working Time
Regulations 1998.
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The Working Time Regulations
Requirement that workers are entitled to at
least 11 consecutive hours in each 24
(reg. 10 (1).
• Hence D expert in Corbett asserted that
11 hours rest were 3 hrs of relief plus 8 hrs
sleep.
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“Waking Hours”
• Claimant in Corbett very needy man aged
22 with mental age of 6. Epilepsy,
emotional disturbances etc.
• Judge accepted evidence that Claimant’s
mother was often woken at night and that
a carer would not enjoy 8 hrs
uninterrupted rest.
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The end of the Live In Carer ?
• The Judge therefore found that D’s model was in
breach of the regulations.
• Also commented that, in any event, the model
was not appropriate for this Claimant.
• Difficult to see how defendants can advance
live-in carer idea now. See HT article in
Personal Injury Law Journal June 2007.
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The Sixth Edition of the Ogden
Tables
• New life tables are for all UK (not just
England and Wales).
• After debate, it was agreed not to include
tables for (eg) smokers/non-smokers or
other higher/lower risk groups.
• This does NOT preclude the parties from
calling evidence of higher/lower lifex.
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The New Section B
• Follows new research of Dr. Wass et al.
• Major features in employability are level of
education and presence/absence of
disability.
• NOT – location, economic conditions,
gender.
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Education
• Divided into three groups – D (degree),
GE-A (A level or good GCSE) and O (poor
GCSE or less).
• Chances of employment for those in top
group very much better than those in
bottom group.
• This is true with or without disability.
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Disability
• Defined as an illness or condition lasting
more than a year which is expected to to
limit substantially the ability to carry out
day-to-day activities.
• Of course some disabilities are so severe
that claimants will never work. But often
claimants do work, albeit at a reduced rate
and with worse prospects.
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Uses of the New Tables
• A defendant can use the tables to show
that even without disability, there is a
significant life-time risk of disability –
particularly for those with limited
education.
• A claimant can use them to show that
disability substantially worsens the risks of
unemployment.
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The Limitations of the Tables
• The tables are not legally binding.
• They are evidence which a Judge can properly
consider – but they can be rebutted by other
evidence re. a particular claimant.
• See HT article in September 2007 Journal of
Personal Injury Law.
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