4. Complex cases
4.1 Interim payments
When a compensator makes an interim compensation payment, they are liable to repay to DWP:
- all recoverable benefits paid up to the date of the interim payment
- lump sum payments paid up to the date of the interim payment.
If further compensation payments are made or an agreement is made under which an earlier compensation payment is treated as having been made in final discharge of the claim, the relevant recovery period will end at that time, if it has not already done so. The compensator will be liable for the repayment of any additional benefits paid during this period.
The compensator should apply for a fresh Certificate:
- before making any further payment, or
- reaching an agreement that a previous payment was in final settlement of the claim.
This Certificate will show details of:
- all recoverable benefits and or lump sum payments, and
- the balance to be paid by the compensator.
In cases where there are recoverable benefits and a further compensation payment is made, the compensator may:
- aggregate the payments already made with the payments about to be made to CRU and the injured person; and
- use these aggregate amounts when calculating the reductions that may be made under Section 8 of the 1997 Act. See also Regulation 9 of the Social Security (Recovery of Benefits) Regulations 1997.
In cases where there are recoverable lump sum payments and a further compensation payment is made, the compensator may:
- aggregate the payments already made with the payments about to be made to CRU and to P, and
- use these aggregate amounts when calculating the reductions that may be made under Regulations 10 and 14 of the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008 .
4.2 Multiple compensators (multi-comps)
A multi-comp case is where there is one incident but more than one compensator/insurer involved.
In multi-comp cases the Certificate belongs to the case, not the individual compensator/insurer.
Once a compensation payment is made the compensator/insurer is liable to pay the Secretary of State an amount equal to the amount shown on the Certificate.
Each compensator who makes a payment to the injured person is liable to repay the amount shown on the Certificate at the date of their settlement.
If the settlement date is the same for all compensators involved in the claim they should work together to apportion their individual liability in order to ensure CRU receives the total amount on the Certificate.
Example of a multi-comp settlement
The claim settles and compensator 1 pays the injured person’s compensation before compensator 2. The total amount of recoverable benefits due at the settlement is £10,000.
The compensators have the following agreement:
- Compensator 1 – 25% liable
- Compensator 2 – 75% liable
Section 6 (1) of the 1997 Act states; “A person who makes a compensation payment in any case is liable to pay to the Secretary of State an amount equal to the amount of the recoverable benefits”
CRU receives £2,500 from compensator 1 who is issued with form CRU18A for the outstanding amount. This is because there are no provisions within the 1997 Act that allow for apportionment. When a compensator makes a compensation payment they are liable for the total amount on the Certificate regardless of their percentage liability to the injured person.
Multi-comp cases involving the FSCS
The total amount on the Certificate will be pursued and any shortfall created by the involvement of the FSCS must be repaid by the solvent compensators involved in the claim.
Each compensator may make only those reductions to the injured person's compensation allowed by Section 8 of the 1997 Act and Regulations 10 and 11 of the Social Security (Recovery of Benefits) (Lump Sum Payments) Regulations 2008 in relation to the compensation they are paying to the injured person and the benefits and or lump sum they are repaying to DWP.
The Health and Social Care (Community Health and Standards) Act 2003, gives provision for apportionment of liability to pay NHS charges where more than one compensator is involved.
CRU can apportion the amount of relevant NHS charges that would be payable if there were only one compensator, if evidence is provided to enable the CRU to determine the liability, of each compensator.
Apportionment cannot be applied to the Social Security (Recovery of Benefits) Act 1997.
4.3 Structured settlements
When a compensator, in final settlement of a claim, enters into an agreement for the making of periodical compensation payments (whether of an income or capital nature) or for the making of such payments and lump sum payments and those payments would fall to be treated as compensation payments:
- the date of the agreement will be treated as the day of a single compensation payment and liability will end at that time, if it has not done so already.
- any further payments made otherwise than under the agreement will be disregarded for the purpose of determining the end of the relevant period in relation to that further payment.
4.4 Payments into court (England, Wales and Northern Ireland)
Where compensation is paid into court the compensator remains liable to repay any recoverable benefits and or lump sum payments due to DWP.
The compensator must obtain a Certificate and lodge it with the payment into court. The payment into court should be net of any recoverable benefits and or lump sum payments and net of any allowable deductions specified in Schedule 2 of the 1997 Act (see Section 1.2, Listed benefits recoverable under the 1997 Act, and Section 1.3, Lump Sum Payments recoverable under the 1997 Act).
The Department for Constitutional Affairs (DCA) made amendments to the Civil Procedure Rules, which are incorporated into the 44th update that came into force on 6 April 2007.
One of the main changes was to abolish Part 36 Payments into Court. The policy intention behind the Social Security (Recovery of Benefits ) Act 1997 was always to end the relevant period (if it had not already ended) once a payment had been made to the injured party.
The specific intention behind Regulation 8 (Payments into Court) was to cease the relevant period before the injured person received the money but only where a payment had been made into Court. This was on the basis that the compensator had actually paid the money.
Under the new rules there is only an offer, which does not trigger the Act and so the relevant period will end when payment in final discharge is actually made, reflecting what may be described as the core policy of the Act.
Please note: Section 16 of the Social Security (Recovery of Benefits) Act 1997 and Regulation 8 of the Social Security (Recovery of Benefits) Regulations 1997 refer to Payments into court.
4.5 Insurer's liability
Further information about cases where the amount of benefits to be repaid and the amount of the compensation exceed the insurers maximum liability may be obtained from CRU.
4.6 Clinical negligence
Clinical negligence cases are handled as multiple claims as there is more than one incident
CRU has a small team of specialists handling clinical negligence cases. This is because consideration must be given to causation and prolongation in order to determine how much of the benefit was paid as a result of the actual negligence, and how much was paid for the original incident.
In clinical negligence claims it is important that the form CRU1 is submitted as soon as you have been notified of the claim. This will enable CRU to provide a prompt and accurate service.
Please contact CRU's Clinical Negligence Team if you have any queries about this complex area of work.
4.7 Goodwill payments
A goodwill payment, usually in the form of gift vouchers or the like, is sometimes made in response to a complaint about a product or incident. For example, if someone slips in a retailer's premises and only suffers a minor injury, inconvenience or embarrassment or if the consumption of foodstuffs is alleged to have caused a stomach complaint.
If such a payment is made at the time of the complaint or incident, CRU does not need to be informed.
However, if such a payment is made at a later date, benefits or NHS treatment may have been received. In these cases, a form CRU1 must be submitted, especially compensation is being sought in respect of:
- loss of earnings,
- cost of care, or
- loss of mobility.
For NHS charges, where incidents or injuries were caused on or after 29 January 2007, liability to pay NHS Charges arises where a compensation payment is made in respect of an allegation of liability for injuries suffered and NHS treatment was received. ‘Compensation payment’ includes not just payments of money but payment in money's worth, which might include, for example, provision of free rehabilitation services. If a payment is made, it is irrelevant whether it is made as a goodwill payment – liability to pay NHS charges would be incurred. Please see Section 7 for further information.
4.8 Professional negligence (paragraph 3.1 also refers)
Where a claim is made for professional negligence and the particulars of claim, statement of claim or letter before action includes a claim for compensation as a result of the original accident, injury or disease, form CRU1 must be submitted and any listed benefits and or lump sum payment paid in consequence of the original accident, injury or disease will be recoverable.
4.9 Property damage only claims
You must notify CRU on form CRU1 if a claim for property damage includes:
- a claim for loss of earnings,
- a loss of mobility,
- cost of care, or
- any other element of compensation.
