As we are all well aware our cash-strapped Government has been searching high and low for new streams of revenue in taxes and other charges and the Department of Social Protection has now got in on the act.  Under the Social Welfare and Pensions Act 2013 new provisions are coming into effect which allow the Social Welfare Department to reclaim from personal injury compensation awards, the value of certain illness related Social Welfare payments made to injured claimants which previously were not recoverable.

The Social Welfare payments involved are Illness Benefit, Partial Capacity Benefit, Injury Benefit, Incapacity Supplement, Invalidity Pension and Disability Allowance, paid to the claimant as a consequence of his personal injury.

Before settling such a claim, the “compensator” – usually an Insurance Company – must apply to the Department for a “Statement of Recoverable Benefits” in respect of the Claimant and pay to the Department the amount specified on that Statement before making a compensation payment to the injured person.  The Insurance Company can offset the amount of recoverable benefits paid to the Department against the amount of compensation to be paid in respect of any claim for loss of earnings or profits.  The important point is that the payment of the “recoverable benefits” to the Department must be made by the Insurer before compensation is paid to the injured person.  It appears the full amount due to the Department must be paid by the Insurer unless there is a Court Order in place in which case the obligation to repay the recoverable benefits to the Department is limited to the total amount of compensation assessed by the Court relating to loss of earnings or profits by the injured person.

On the face of it, it may seem fair that the Department should be reimbursed for payments made to the injured person, which is all fine and dandy when liability for the accident is not in dispute and the claim is relatively straight forward.  If liability is in dispute, however, considerable difficulties arise in relation to the settlement of such claims and it appears that it will be necessary to obtain formal detailed Court Orders to clarify what must be reimbursed to the State.  Certain personal injury claims are excluded from these new provisions but it appears that certain types of settlements currently available may no longer be possible under the new regime.  The new provisions were to have taken effect from the 12th May 2014 but because of procedural difficulties have been postponed-but not for long.  Accordingly, it is essential that personal injury claimants are legally advised of the effect of these provisions on their compensation claims.