Advisers

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1. The Law

The law on the recovery scheme is contained in:

The main provisions of the CRU scheme are that:

However where a payment was made on or after 6 October 1997 in accordance with a Court Order or agreement made before that date, the provisions of the Social Security Administration Act 1992 and the Social Security (Recoupment) Regulations will continue to apply.

In certain circumstances it will be possible for the compensator to deduct some or all of the amount he has had to repay to the Secretary of State from the gross compensation award, a practice known as "offsetting"

If after we have looked at the Certificate again we find that there is no recoverable benefit and or lump sum due to the Secretary of State then the Certificate may be revoked.

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1.1 The relevant period

The period in respect of which benefits, listed in Schedule 2 of the 1997 Act, may be recovered by DWP begins on:

The period ends on:

Please note: 'The relevant period' is defined in Section 3 of the Social Security (Recovery of Benefits) Act 1997.

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1.2 Listed Benefits covered by the scheme

Compensation in respect of Loss of Earnings during the relevant period may be reduced where the following benefits have been paid to meet the same need.

Compensation in respect of Cost of Care may be reduced where the following benefits have been paid during the relevant period:

Nursing care and attendance (including Holiday/Respite care) and the inability to cook may fall within Schedule 2.

Compensation in respect of Loss of Mobility may be reduced where the following benefits have been paid during the relevant period

Travel to hospital for treatment and additional costs of travel including;

Vehicle/Powered wheelchair/Adaptations to transport/Taxi – bus fares (where paid as a result of accident, injury or disease)/increased cost of car/Additional travel for holiday may fall within Schedule 2

NB: Payment into court forms require the compensator to list the benefits which have been offset against the above heads of damages.

Damages not within Schedule 2

Pain and suffering
Loss of future earnings
Cost of future care
Loss of future mobility
Loss of expectation of life and bereavement
Loss of amenities of life
Loss of society
Loss of leisure
Loss of specific enjoyment
Loss of deprivation of privacy
Loss of marriage prospects
Breakdown of marriage
Second home on breakdown of marriage
Loss of carrying out DIY
Loss of housekeeping capacity
Loss on the labour market
(Smith v Manchester)		 Loss of congenial employment
Loss of benefits associated with injured person's work
Loss of use of motor car
Hospital visits other than for treatment
Medical expenses (not included in cost of respite or
nursing care and attendance)
Special appliances (except as mentioned in
loss of mobility)
Special diet
Special accommodation
Paid help, gardener/cleaner
Guide dog
Court protection fees
Actuarial evidence and related matters
Investment/management advice
Loss of financial interest
Loss of pension rights

It is stressed that the above list is not definitive, nor does it purport to be an interpretation of the law. It is for general guidance only, and should be treated as such.

Where the amount of compensation in respect of a particular head of compensation is less than the amount of a listed benefit to be recovered, the compensator is liable to pay the difference. He may not reduce payment against any other head of compensation to take account of the recovery of a listed benefit.

Examples of Offsetting:

Example 1 - Benefit recovery only

Example 2 - Benefit recovery only

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1.3 Lump Sum payments covered by the scheme

Example of Offsetting - Lump sum and benefit recovery

Please note: Heads of Compensation are defined in Schedule 2 of the Social Security (Recovery of Benefits) Act 1997.

NOTES

  1. If the claim is settled for general damages only, the compensator is still liable to repay the full amount of listed benefits and or lump sum payments as shown on the Certificate.
  2. The compensator cannot deduct any amount in respect of a listed benefit from the compensation awarded for general damages (pain and suffering). However they can deduct any amount in respect of a lump sum from any part of the compensation award.
  3. Lump Sum Payments must be offsett against pain and suffering first.
  4. Attendance Allowance was replaced by the care component of Disability Living Allowance (DLAC) from 6 April 1992.
  5. Mobility Allowance was replaced by the mobility component of Disability Living Allowance (DLAM) from 6 April 1992.
  6. Unemployment Benefit and Income Support for unemployed people was replaced by Jobseeker’s Allowance on 7 October 1996.
  7. Incapacity Benefit replaced Sickness and Invalidity Benefit from 13 April 1995.
  8. Statutory Sick Pay – 100 per cent of SSP paid before 6 April 1991 and 80 per cent of SSP paid from 6 April 1991 to 5 April 1994 is recoverable. Payments made after 6 April 1994 are no longer subject to recovery.
  9. Disabled Persons Tax Credit, now Working Tax Credit, replaced Disability Working Allowance from 5 October 1999.
  10. No new or non-linking claims to Severe Disablement Allowance (SDA) may be accepted with an entitlement date after 6 April 2001. Customers currently in receipt of SDA will remain entitled as long as they continue to satisfy the qualifying conditions.
  11. Employment and Support Allowance replaces Incapacity Benefit, and Income Support on the grounds of incapacity, for all new claims from 27 October 2008
  12. Retirement Pension is not a recoverable benefit. However any of the benefits listed on the previous two pages which continue to be paid after retirement age will be subject to recovery.
  13. Where a lump sum payment has been made to a dependant(s) of P and the compensator is making a compensation payment in respect of P under the Fatal Accidents Act, to that dependant(s), CRU will recover the lump sum amount equal to the amount of compensation paid to that dependant(s).
  14. Pensions awarded by the Service Personnel and Veterans Agency are not a recoverable benefit, but may be adjusted to take account of a compensation payment.
  15. Bereavement benefits are not recoverable; however any other benefits listed in Schedule 2 to the Social Security (Recovery of Benefits) Act 1997 which have been paid to the bereaved person may be recoverable.

 

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1.4 Exempt payments in respect of the recovery of listed benefits and lump sum payments.

Recovery will not be made from the following types of payments as listed in Schedule 1 of the 1997 Act.

  1. Any small payment (defined in Part II of this Schedule).
  2. Any payment made to or for the injured person under Section 35 of the Powers of Criminal Courts Act 1973 or Section 249 of the Criminal Procedure (Scotland) Act 1995 (compensation orders against convicted persons).
  3. Any payment made in the exercise of a discretion out of property held subject to a trust in a case where no more than 50 per cent by value of the capital contributed to the trust was directly or indirectly provided by persons who are, or are alleged to be, liable in respect of:
    1. the accident, injury or disease suffered by the injured person, or
    2. the same or any connected accident, injury or disease suffered by another.
  4. Any payment made out of property held for the purpose of any prescribed trust (whether the payment also falls within para. 3 above or not).
  5. Any payment made to the injured person by an insurance company within the meaning of the Insurance Companies Act 1982 under the terms of any contract of insurance entered into between the injured person and the company before:
    1. the date on which the injured person first claims a listed benefit in consequence of the disease in question, or
    2. the occurrence of the accident or injury in question.
  6. Any redundancy payment failing to be taken into account in the assessment of damages in respect of an accident, injury or disease.
  7. So much of any payment as is referable to costs.
  8. Any prescribed payment.

The following trusts are prescribed for the purpose of paragraph 4 of Schedule 1: and may be found in Regulation 2.1 of the Social Security (Recovery of Benefits) Regulations 1997, and Regulation 7 of the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008.

  1. the Macfarlane Trust established on 10th March 1988 partly out of funds provided by the Secretary of State to the Haemophilia Society for the relief of poverty or distress among those suffering from haemophilia;
  2. the Macfarlane (Special Payments) Trust established on 29 January 1990 partly out of funds provided by the Secretary of State for the benefit of certain persons suffering from haemophilia;
  3. the Macfarlane (Special Payments) (No. 2) Trust established on 3 May 1991 partly out of funds provided by the Secretary of State for the benefit of certain persons suffering from haemophilia and other beneficiaries;
  4. the Eileen Trust established on 29 March 1993 out of funds provided by the Secretary of State for the benefit of persons eligible for payment in accordance with its provisions;
  5. a trust established out of funds provided by the Secretary of State in respect of persons who suffered, or who are suffering, from variant Creutzfeldt-Jakob disease for the benefit of persons eligible for interim payments in accordance with its provisions; (Statutory Instrument 2001 No. 1118, which amends the 1997 Regulations).
  6. a trust established out of funds provided by the Secretary of State in respect of persons who suffered, or who are suffering, from variant Creutzfeldt-Jakob disease for the benefit of persons eligible for payments, other than interim payments, in accordance with its provisions. (Statutory Instrument 2001 No. 1118, which amends the 1997 Regulations).

    • The following payments are prescribed for the purposes of paragraph 8 of Schedule 1 of the 1997 Act, and Regulation 7 of the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008.
    • any payment made under the Vaccine Damage Payments Act 1979(c) to or in respect of the injured person;
    • any award of compensation made to or in respect of the injured person under the Criminal Injuries Compensation Act 1995(d) or by the Criminal Injuries Compensation Board under the Criminal Injuries Compensation Scheme 1990 or any earlier scheme;
    • any payment made to the injured person in respect of sensorineural hearing loss where the loss is less than 50 dB in one or both ears;
    • any contractual amount paid to an employee by an employer of his or hers in respect of a period of incapacity for work;
    • any payment made under the National Health Service (Injury Benefits) Regulations 1995(e) or the National Health service (Scotland) (Injury Benefits) Regulations 1974(f);
    • any payment made by or on behalf of the Secretary of State for the benefit of persons eligible for payment in accordance with the provisions of a scheme established by him on 24th April 1992 or, in Scotland, on 10th April 1992
    • any payment made from the Skipton Fund, the ex-gratia payment scheme administered by the Skipton Fund Limited, incorporated on 25 March 2004, for the benefit of certain persons suffering from hepatitis C and other persons eligible for payments in accordance with the scheme's provisions.
    • any payment made from the London Bombings Relief Charitable Fund, the company limited by guarantee (number 5505072) and registered charity of that name established on 11th July for the purpose of (amongst other things) relieving sickness, disability or financial need of victims (including families or dependants of victims) of the terrorist attacks carried out in London on 7th July 2005.

NB. For Northern Ireland only: any payment made to or for the injured person under Article 14 of the Criminal Justice (Northern Ireland) Order 1994 (compensation orders against convicted persons).

Please note: Where it is clear that the compensation claim falls into one of the above categories, you do not need to send form CRU1 to us.

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1.5 Exempt trusts and payments, which only apply to the recovery of listed benefits

any payment to the extent that it is made -

  1. in consequence of an accident under the Fatal Accidents Act 1976(a) or
  2. in circumsatances where had an action been brought, it would have been brought under that Act

any payment to the extent that it is made in respect of a liability arising by virtue of Section 1 of the Damages (Scotland) Act 1976(b);

any payment made under the Fatal Accidents (Northern Ireland) Order 1977(c)

any compensation payment made by British Coal in accordance with the NCB Pneumoconiosis Compensation Scheme set out in the Schedule to an agreement made on the 13 September 1974 between the National Coal Board, the National Union of Mine Workers, the National Association of Colliery Over-men Deputies and Shot-firers and the British Association of Colliery Management;

the UK Asbestos Trust established on 10 October 2006, for the benefit of certain persons suffering from asbestos-related diseases or

the EL Scheme Trust established on 23 November 2006, for the benefit of certain persons suffering from asbestos-related diseases.

Where compensation is paid under any of the above, for any of the following diseases;

a form CRU1 must be completed to enable a Certificate to be issued which will provide details of any Lump sums paid.

Please note: The Social Security (Recovery of Benefits) Act 1997 Schedule 1 Part 1, the Social Security (Recovery of Benefits) Regulations 1997 Regulation 2 and Regulation 7 of the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008 lists all exempt payments and trusts.

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1.6 DWP right to inspect records

The Social Security Administration Act 1992 Section 110, gives DWP inspectors the right to examine the records of compensators and employers to verify that they are complying fully with the provisions of the Social Security (Recovery of Benefits) Act 1997.

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1.7 How the recovery scheme works

The main procedures for compensators

  1. compensation claim received;
  2. check the details to be given to CRU (name, address, date of birth, National Insurance number etc);
  3. notify CRU of the claim within 14 days. A form CRU1 is provided for this purpose (also available electronically see Section 13 );
  4. receive acknowledgement of notification (form CRU4);
  5. when ready to make an offer of compensation, return form CRU4 to apply for a Certificate;
  6. receive acknowledgement of application, CRU 5 (if not received within 14 days check with CRU);
  7. receive Certificate (if not received by date given on acknowledgement check with CRU). A copy will be sent to the injured person or his representative;
  8. pay compensation and, if any deductions have been made in accordance with either the 1997 Act, or the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008 you must inform the injured person;
  9. notify CRU of the result of the claim, even if it is unsuccessful, by returning the form CRU102 that accompanies the Certificate. Ensure that any changes to your reference number are clearly noted;
  10. notify CRU of the date the compensation payment is made in final discharge of the claim,
  11. the compensator becomes liable to pay the full amount of the recoverable benefits and or lump sum payments to the CRU immediately before making the compensation payment;
  12. pay the total amount of recoverable benefits and or lump sum shown on the Certificate to the DWP. The CRU may enforce this debt through the courts at any point from the fifteenth day following the date the compensation was paid.

Please note: Payment should not be sent to CRU if a compensation payment has not been made to the injured person.

The CRU Process

  1. Compensator receives a claim for compensation
  2. Compensator completes a CRU1 form and sends to CRU
  3. CRU4 form sent to Compensator by CRU
  4. Compensator is ready to settle claim and returns CRU4 requesting a Certificate.
  5. CRU gathers benefit and or lump sum payment information, relating to the injured person and his accident, injury or disease
  6. Certificate of benefit and or lump sum payment issued to Compensator and copy to injured person or his representative
  7. Compensator pays final compensation to the injured person
  8. Compensator notifies the CRU of the date the compensation payment was made in final discharge of the claim and repays the total amount of benefits and or lump sums to the CRU. CRU may enforce this debt through the courts at any point from the 15th day following the date the compensation was paid.

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