1. The Law
1.2 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.
- Disability Working Allowance
- Industrial Injuries Disablement Benefit (also known as Disablement Pension)
- Incapacity Benefit
- Income Support
- Invalidity Pension
- Invalidity Allowance
- Jobseeker’s Allowance
- Reduced Earnings Allowance
- Severe Disablement Allowance
- Sickness Benefit
- Statutory Sick Pay paid before 6 April 1994
- Unemployability Supplement
- Unemployment Benefit
Compensation in respect of Cost of Care may be reduced where the following benefits have been paid during the relevant period:
- Attendance Allowance
- Care Component of Disability Living Allowance (DLA Care)
- Disablement Pension increase for Constant Attendance Allowance
- Exceptionally Severe Disablement Allowance
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
- Mobility Allowance
- Mobility Component of Disability Living Allowance (DLA Mobility)
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 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 benefit recovery.
Offsetting: an example
- An award of compensation totalling £100,000 is agreed and broken down as follows: general damages of £40,000, £30,000 in respect of loss of earnings and £30,000 in respect of loss of mobility.
- The CRU certificate lists Incapacity Benefit totalling £5,000, Income Support totalling £10,000 and Disability Living Allowance (Mobility Component) totalling £10,000.
- The compensator may not under any circumstances offset against the general damages element of the award. He may however offset the Incapacity Benefit and Income Support against the loss of earnings head of damage, as set out in section 8 and Schedule 2 of the Recovery of Benefits Act. He therefore deducts a total of £15,000 from the loss of earnings sum, leaving £15,000 to be paid to the injured person.
- Similarly, the compensator may offset the £10,000 DLA (Mobility) against the loss of mobility head of damage, leaving £20,000 to be paid to the injured person.
- The injured person has settled his claim for a total of £100,000. Following offsetting, he receives £75,000 from the compensator in addition to the £25,000 he has already received from the state benefits system. Double compensation is thereby avoided.
- Likewise an award of compensation totalling £100,000 is agreed and broken down as follows: general damages of £40,000, £30,000 in respect of loss of earnings and £30,000 in respect of loss of mobility.
- The CRU certificate lists Incapacity Benefit totalling £20,000, Income Support totalling £50,000 and Disability Living Allowance (Mobility Component) totalling £30,000.
- The compensator may not under any circumstances offset against the general damages element of the award. He may however offset the Incapacity Benefit and Income Support against the loss of earnings head of damage, as set out in section 8 and Schedule 2 of the Recovery of Benefits Act. He therefore deducts a total of £30,000 from the loss of earnings sum, leaving Nil to be paid to the injured person, but the CRU certificate shows that £70,000 should be repaid to the Secretary of State. As the compensator can only offset £30,000 he is liable to pay the difference (£40,000) himself.
- The compensator may offset the £30,000 DLA (Mobility) against the loss of mobility head of damage, again leaving Nil to be paid to the injured person.
- The injured person has settled his claim for a total of £100,000. Following offsetting, he receives only the award for general damages amounting to £40,000. Double compensation is thereby avoided.
Please note: Heads of Compensation are defined in Schedule 2 of the Social Security (Recovery of Benefits) Act 1997.
NOTES
- If the claim is settled for general damages only, the compensator is still liable to repay the full amount of benefits as shown on the Certificate.
- The compensator cannot deduct any amount from the compensation awarded for general damages (pain and suffering).
- Attendance Allowance was replaced by the care component of Disability Living Allowance (DLAC) from 6 April 1992.
- Mobility Allowance was replaced by the mobility component of Disability Living Allowance (DLAM) from 6 April 1992.
- Unemployment Benefit and Income Support for unemployed people was replaced by Jobseeker’s Allowance on 7 October 1996.
- Incapacity Benefit replaced Sickness and Invalidity Benefit from 13 April 1995.
- 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.
- 8. Disabled Persons Tax Credit, now Working Tax Credit, replaced Disability Working Allowance from 5 October 1999.
- 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.
- 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.
- 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.
- 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.