Two High Court judges have clashed over the court’s practice of making consent orders under personal injury settlements which result in insurers not having to reimburse the taxpayer for State benefits paid to plaintiffs arising from their injuries.
The consent terms mean insurers/defendants do not have to reimburse the Department of Social Protection (DSP) for some benefits paid to the injured party, with the effect the defence has more money available to it to buy off the plaintiff’s claim.
The department estimated it had a shortfall of some €20 million in recoverable benefits in 2017, Mr Justice Michael Twomey noted.
The core dispute between Mr Justice Twomey and Mr Justice Kevin Cross is whether the High Court should make such consent orders.
In judgments on three separate cases, two in June and the latest published this month, Mr Justice Twomey concluded the court should not, for reasons including that such orders arose from a private settlement between parties whose interests were aligned in seeking the consent term.
Mr Justice Twomey reiterated that view in his latest judgment, which follows a July judgment of Mr Justice Cross strongly disagreeing with his colleague.
Mr Justice Cross, who manages the court’s personal injuries list, said the universal practice in personal injuries cases was that, in consent cases, the sides’ agreement on the position concerning recoverable benefits was accepted by judges.
The relevant law on recoverable benefits did not impose any limitation on the types of court order to be made or stipulate that the order must be made only after hearing evidence or submissions from State parties, he said.
Significance
The issue has widespread significance for many cases and the Supreme Court may ultimately be asked to resolve the dispute.
Under the Recoverable Benefits and Assistance Scheme 2014, defendants deemed responsible for a plaintiff’s injuries must reimburse the State for benefits paid to the plaintiff arising from their injuries. The amount is ordered or assessed by a court under section 343R(2) of the Social Welfare Consolidation Act.
However, when plaintiffs and defendants/insurers settle a case, they can reach a private agreement concerning the extent of the defendant’s/insurer’s liability.
Mr Justice Twomey noted the sides can, for example, agree the defendant is only 10 per cent liable with the result it is also liable to reimburse only 10 per cent of the State benefits.
If a court inserted that agreed term in the court order, the effect is the DSP would end up subsidising the defendant/insurer to make the settlement payment to the plaintiff, he said.
He stressed there was no suggestion of fraud by plaintiffs or defendants or any suggestion of bad faith by parties or lawyers involved in such settlements.
In the first two cases before the judge where the point arose, the defendants were insurers but the third case involved a settlement with the HSE.
In all three cases, he held consent terms should not be inserted in court orders because they were:
- not based on evidence tested in court before a judge with no financial interest in the conclusion;
- arose from a private settlement between parties whose interests are aligned in seeking the terms;
- the effect is to have the taxpayer subsidise the settlement payment by the insurer/defendant and:
- the taxpayer has no say in the proposed consent term.
State party
He rejected arguments that a different situation applied in the third case because the settling defendant was the HSE, a State party.
In that case, a man sued his brother’s tiling company and the HSE after he fell at a HSE premises while working for the firm, which no longer trades and did not appear to be insured.
The HSE decided to buy off the litigation risk by agreeing a “relatively modest” – compared with normal High Court damages and costs – settlement for reasons including the alleged primary responsibility for the accident lay with the firm and issues of contributory negligence.
Most of the settlement would go towards the man’s legal fees, Mr Justice Twomey noted.
The man had received State benefits of some €42,000 and his side, and the HSE, wanted the court order to include a term which would result in the DSP not recovering that sum from the HSE.
That means the taxpayer would be subsidising the HSE in making a small sum payable to the man but primarily for the payment of legal costs, the judge said.
The court could not assume, as the HSE argued, such an order was in the State’s financial interests, he said. The fact the HSE and DSP were both State bodies was not sufficient to distinguish this case from his conclusion that such consent terms should not be included in a court order.
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