The effectiveness of the Personal Injuries and Assessment Board

The Personal Injuries Assessment Board Act 2003 (as amended by the 2007 Act) and the Civil Liability and Courts Act 2004 are important legislative enactments to affect personal injuries litigation in Ireland. The Personal Injuries and Assessment Board (hereafter PIAB or the Board, now known as Injuriesboard.ie) was established in April 2004 as part of the Government’s insurance reform programme, with the aim of allowing certain classes of personal injury claim, where liability is contested, to be settled without the need for many of the costs, including expert fees, associated with litigation and to reduce the amount of time it takes to finalise a claim of compensation. The Board also has as its objectives to assess how much compensation is due to an injured party. Debate over the Board’s fairness and efficacy persists (Ilan, 2009). Legal practitioners claim that its solicitor-sceptical ideology is a snub to the legitimate rights of applicants. Other serious questions are: what portion of the alleged cost savings in insurance premiums have been passed on to consumers? Is it fair that claimants have to pay for independent legal advice when ultimately they are successful in their claim? Is an applicant depriving himself as the awards could be lower than the tariff applied in the courts? Binchy argued that the PIAB ‘is a major project, carrying the risk of injustice to vulnerable victims of wrongs’ (2005, p. 44). He also observes that ‘time will tell whether the Two Acts succeed in their goals, and at what price’. Time has come. Each of the above objectives and problematic areas are briefly examined to assess if the system currently in operation is a good form. Evidence from other legal systems will be touched on: that the tendency to file a claim in tort is influenced more by evolutions in substantive law (like the reduction of social security coverage), rather than by changes in procedural aspects. First the PIAB’s back ground and operations will be discussed to understand its objectives fully.

Background
During the 1980s and 1990s there was a substantial increase in the number of personal injuries actions, many of them concerning accidents on the road, in supermarkets, or at work (Byrne and McCutcheon, 2009). Statistical evidence gathered nationally and internationally confirmed that Ireland had a claims culture of significant proportions. Ireland had the lowest personal injury rate in Europe, yet the ratio of claims was the highest (Ibec, 1999). Personal injuries accounted for over 86 per cent of the plenary summons actions put down for the trial in the HC during the nineties. The insurance and wider business communities were the main lobbyists for the establishment of the Board. They produced statistics indicating that the attendant costs of defending litigation amounted to an average additional 42% of compensation paid out. The Deloitte & Touche Report of 1996 on An evaluation of Insurance Costs in Ireland confirmed that insurance costs in Ireland were relatively high compared to other European countries. It is said that the increase in claims has been fuelled by the increase in the number of solicitors since the early 1980’s, who, in an increasingly competitive business environment, encourage litigation by promising a ‘free first consultation’ and a commitment to process personal injuries cases on a ‘no foal, no fee’ basis. The legal profession denies that fees are excessive, pointing to the high level of legal fees in other states. Court awards are alleged to be excessive and in many events well above European norms, including the UK, are also said to lead potential litigants to believe that a financial bonanza awaits them in court. It is also alleged that the fees charged by some members of the legal profession in such cases are somewhat inflated. In addition, it is alleged that insurance companies may settle too many claims out of fear of further costs in the courts, thus encouraging future claims. There has also been some criticism that personal injuries awards involve a once-off lump sum payment, while in the UK it is possible to have staged payments instead (Byrne and MucCutcheon, p.196-198). Fundamental and far-reaching reform was introduced, based on the 2001 Report of the Advisory Group on Personal Injuries and the MIAB Report . These reports led to the enactment of the PIAB Act 2003 and the Civil Liability and Courts Act 2004. Binchy (2005) sums up that they are designed to bring down the cost of insurance, root out false claims, smooth the path of litigation, encourage settlement and generally make the lot of defendants happier than before.
There was an amendment in 2007, with the Personal Injuries Assessment Board (Amendment) Act 2007. The aims and effects of this Acts are summed up by O’ Connor (2009) in few words; ‘’if responsible lawyers dare to advise their clients that they have a decent chance of getting a better award in a personal injury case, and they turn out to be incorrect by the least margin, even down to one cent, then that plaintiff can recover no costs at all in respect of that action.’’
Operations
The 2003 Act provides that a claimant must issue his/her claim through PIAB, rather than through the Courts. Medical negligence claims or complex injuries are excluded from the remit of PIAB. Under the legislation, P IAB will operate a ‘documents only’ system of assessment. Assessments of general damages for pain and suffering will be based primarily on medical reports from the claimant’s doctor but in some cases the claimant will be examined by a member of an independent medical panel established by the Board. A claimant must submit his/her claim to the PIAB by way of a completed Application. A medical report is also required and vouching in respect of incurred outlay and copies of all correspondence to date with the other party. Where the Respondent consents to an assessment by the PIAB, or where the Respondent does not reply within a period specified by the PIAB in its notice to the respondent, the PIAB will carry out an assessment of the amount of damages the claimant is entitled to in respect of that claim. This is based on the assumption that the respondent is fully liable. No oral hearing will be conducted for the purposes of the assessment. The PIAB employs assessors who will make their assessment by reference to the information, records and documents that have been furnished to them by the claimant and respondent.
Under s.13 of the 2003 Act, the PIAB contacts the respondent. If the respondent wants to contest, the PIAB issues to the claimant an authorisation to issue legal proceedings in relation to the claim. The PIAB will set out procedures for the carrying out of an assessment if one or more of multiple respondents do not consent to an assessment taking place. When the assessment is complete, PIAB will notify both parties regarding the total amount of the award and will explain how the compensation was calculated. Both the respondent and claimant are free to accept or reject the award. The respondent has 21 days to reject the award, the claimant 28 days. The PIAB will send the claimant an authorisation to initiate court proceedings if either party rejects the award. An Order to Pay will be issued If they agree to the award or fail to respond. This holds the same status as an award of Court. If the respondent does not pay the award to the claimant within a reasonable time, then interest and other penalties may be added to the amount due.
The breakdown of 2008 Awards by category :

Administration Costs

The Chief Executive of Injuriesboard.ie, Patricia Byron, claims that awards are now delivered four times faster than the courts and with a lower administration charge. She also states that the Injuriesboard.ie model delivers direct and indirect savings of over €300m to the economy with no cost to the Exchequer, as it is funded through fees charged, by and large, to insurers. Ilan and Scott (2009) argue that this statement is in fact misleading, as a key assumption of the PIAB is that all claims resolved by PIAB awards would otherwise have gone to full litigation – thus private settlements for example are not accounted for in the Board’s analysis. The authors do not deny that savings are made, but observe that ‘’savings are likely to be considerably less than the PIAB estimate.’’ Also, Ilan (2009,p.9) mentions further complications in figures, such as ‘’ the “spike” in cases in and around 2003-4 when claimants rushed to file their cases under the familiar old regime, avoiding the need to apply first to PIAB.’’ Furthermore, PIAB does not take into account in its analysis that parties still take up legal presentation resulting in either rejection or settlement before PIAB makes an award.

Awards of Damages

The Book of Quantum, produced by the PIAB, provides the first formal scale of damages. The book is often described as of limited value, as judicial decisions and academic comment have noted a number of deficiencies in it; these include categories of injury not catered for and differences in value between court awards and the book’s range of damages for equivalent injuries (Quill, 2009). Indeed, Binchy (2005) describes it as a curious document. ‘’Whilst it lists ranges of awards for injuries to the head, arm, neck, back, trunk, legs, feet and toes, psychiatric injuries or post-traumatic stress disorder are not mentioned. The book of quantum sets out threshold levels of damages to be awarded for different kinds of injury. The highest award in the Book of Quantum is € 3000.000 for quadriplegia or paraplegia. Binchy (2005, p.69) suggests that some amount s tend to be generous. Pierse (2005) observes that comparisons with the Judicial Studies Board for Northern Ireland and the UK show that the PIAB book, in so far as it deals with specific comparable injuries, gives higher “scales” for awards on paper. Pierse suspects back in 2005 that this is done for the purpose to popularise the scheme in the beginning. His hypothesis has failed: there was a notable increase in the value of accepted awards between 2006 and 2007, which rose from €66,732,000 to €102,000,000(PIAB Annual Report 2008). The lowest and highest awards in 2009 were €1,000 and €493,902 respectively. The data released indicates that 88% of awards made by the Board are for less than €38,000, a figure which is in line with data on Court awards, according to the Board’s website. Binchy (2005) details the case of Breen v. Fagan and the Motor Insurers Bureau of Ireland where the Supreme Court upheld an award of € 80,000 for injuries to a young woman’s neck and back. It should be noted that it may not be fair to include this case here, as the book quoted from, co-edited by Binchy, deals with the Civil Liability and Courts Act 2004, although reference to the PIAB is made throughout. The Supreme Court held: ‘’whilst it might be thought to be on the high side on the face of the evidence,’’ it fell within the range in respect of which the Supreme Court ought not to intervene. Thus, the injury could not be regarded as being at the upper end of a back injury, yet the amount awarded was the maximum prescribed by the Book of Quantum. It can be questioned if a litigant would have got this amount via the PIAB, and he could be financially better of by going to the courts, as a court is free to deviate from the Book of Quantum, whereas the PIAB has not that power. In law, the Courts are only obliged merely to have regard to the Book of Quantum’s provisions and can have regard to factors as inflation in assessing damages; whereas PIAB cannot. Binchy (2005, p.70) cites Ledwith v. Bus Atha Cliath where an award of € 90,000 was upheld for a laceration of his lip but he also sustained a post traumatic stress disorder. The victim will now have to seek address via the PIAB first. While the Book of Quantum makes a brief reference to the entitlement to be awarded compensation for loss of earnings or other financial loss, it lays no great stress upon it. In contrast, PIAB has access to relevant information from the Revenue Commissioners and the Department of Social and Family Affairs to validate the amounts claimed and benefits received in relation to loss of earnings. Binchy (2005) questions if a victim of tort, without professional legal advice, would lose out with the PIAB route, as they would have no effective notice that a trivial physical injury might generate an entitlement to very substantial damages if his claim was accompanied by a psychiatric or psychological condition. Of course, with the hindsight there is now, the counter claim can be made that legal advice is often still sought, as the rate of settlements suggest: ‘’ of the claims notified to PIAB in 2007, 34 per cent were settled before PIAB made an award (According to Injuriesboard.ie annual report 2008).’’.
Pierse (2005) is more critical than Binchy in relation to the amount of damages. He finds that there is a huge variation on the “price/injury” estimates and he is critical that it does not show how it will deal with multiple injuries. He thinks that ‘’the lower end of the scales are about right and the higher end of the scales are too low, i.e. for serious injury of long duration cases.’’ Pierse is even more critical about the amount of guessing in determining awards.
Board proponents, as cited by Ilan (2009) have aired the suspicion that having recourse to the courts may be a strategy to recover the legal costs which would not be awarded under the PIAB process. This is now made irrelevant as there is now less scope to secure legal costs following the enactment of Personal Injuries Assessment Board (Amendment) Act 2007. The courts can thus not award legal costs against a personal injury defendant where the court award is lesser than, or equal to, an award previously issued by PIAB and subsequently rejected by a claimant.
As O’ Connor (2009) points out, the values in the Book of Quantum on which PIAB is obliged to base its assessment are unchanged from the first—and to date, only—edition of that book, dated June 2004. As these figures are collated from the awards made by the Courts in 2002 and certainly no later than 2003, this means that these awards are based on figures now some 8 years out of date. Ironically, O’ Connor’s concern regarding rising inflation is does not totally hold up due to the current economic climate. His reference to comparing house prices can be said to be a poor choice: ’’ a return of house prices to 2005 levels, still less to those of 2003, is viewed with dread’’ has now realised. A counter claim is that medical costs are still on the increase, and these would be more relevant in most personal injury cases than house prices. His assertion that PIAB is obliged to make its assessments on values that are completely disconnected holds true – it has never been updated since PIAB published the book in June 2004, while it seems to have the powers to do so in Section 54 of the PIAB Act. A spokesman for PIAB says: ‘’ that any review of legislation is a matter for the minister or department as to when this takes place.’’

Expedience of Assessment
Another objective of the PIAB was to speed up the assessment of claims. Hogan (2006) says that there has been a dramatic improvement. This it appears to have done. In fact, the improvement has been dramatic according to Hogan’s report. The PIAB aims to complete the assessment within a statutory nine-month period and the average court litigation time frame of 36 months (taken from before PIAB was enacted). As said before, figures can be mitigated due to increase of injuries cases before the courts in 2003. Also, according to Ilan (2009), personal injury litigation in the courts is on the increase again. In my personal opinion, it does not take into account rejection of awards (i.e. claimant going to court chasing high award for psychological injury) leading to forsaken time before PIAB will stamp the required authorisation for initiation of court proceedings . Nevertheless, it can be concluded that there was an improvement, maybe less dramatic than Hogan suggests.

Legal representation
The PIAB’s incarnation to reduce economic costs resulted in the indication that the PIAB route is solicitor-free. Members of the legal profession, including Fay (2005), have therefore accused the PIAB of obstructing the legal profession. A well-known and long-going case in relation to this is O’Brien v PIAB. In 2009 an appeal from PIAB was dismissed by the Supreme Court, and therefore the finding upheld that the PIAB had interfered in the solicitor-client relationship and had acted ultra vires by corresponding (contrary to the client’s wishes) directly with the client. While this decision turns on the question of ultra vires and the Board’s powers, the substance of the judgement revolves around the question of legal presentation. The Law Society’s submissions in this case seem to be that the PIAB procedure is adverse to the claimant’s interests, and that the direct intervention of a legal representative is the sole means of protecting the client. Quigley (2005) is critical of this assumption: ‘’the only interest that is vindicated is counsel’s fundamental right to client’’ (p.202) One of his arguments is that the claimant may still engage completely with his or her solicitor, and may authorise his solicitor to complete all PIAB correspondence, and, since O’Brien was upheld, deal directly with claimant’s solicitor. Quigley (2005, p.200) finds that there is no rationale to justify the imposition of a right to legal representation into the procedure – there are no oral hearings, no adversarial submissions and no threats to property rights of other interests. A solicitor for McCann and FitzGerald is also supportive of the PIAB: ‘’ any system which avoids people having to go to court and incur all the expense and suffer the trauma that court actions involve is a positive thing. My experience is that lay-people who have no experience of the court system can be daunted by the barristers and judges. The PIAB seems to make the process more user-friendly, even its website seems quite easy to navigate. ‘’ As mentioned above, there is some evidence especially in more complex cases, that claimants still seek legal presentation, which often results in settlements before the PIAB has the opportunity to award damages within the 9 month period.
Limitations of Actions
The limitation period for personal injuries arising from negligence or breach of duty has been reduced from three years to two years. Ryan (2005) argues that this reduction presumably was made to ease the plight of defendants and is therefore pro-defendant. Also, medical reports may be difficult to source, especially for the fee of just 150 euro. The limitations of actions seem to reduce the amount of fraudulent claims (Hogan, 2006; Ilan, 2009). Hedley (2005) criticises the reduced period as it can diminish equity for those who are not fraudulent.

Insurance Premiums
The reform programme leading to the incarnation of the PIAB was the excessive insurance costs, which the PIAB was set to reduce.. Has it done so? Ilan (2009) quotes a report from a 2006 report of the Financial Regulator, which showed that insurance premiums were already falling before the inception of PIAB, although the report acknowledges the role of PIAB in growing and accelerating the reduction. The Oireachtas has expressed satisfaction with the progress which the Board has made since its establishment, in particular its impact on insurance costs (Annual Report 2008).

Argument of compo-culture: other legal systems
There is a plethora of international literature on ‘the claim culture’ as it is a world-wide problem, not only Irish. Hedley (2005) examines New Zealand, where, until 1974, a common law system of liability existed much like Ireland did pre-PIAB. This is now replaced with a state injury fund – payers of insurance premiums pay to a state agency, paying out to anyone accidentally injured, on a no-blame basis. Closer by within the EU, but in a civil law country, contingency fees as a no win no fee basis are prohibited for solicitors (although these appear to be charged by commercial legal assistence agencies), and increasing popularity of legal assistance insurance in the Netherlands has not led to an increase in the number of tort cases, whereas the substantive law with respect to compensation for victims and the resulting case law (especially concerning traffic accidents) has to some extent been ‘successful’ in preventing more cases from going to court,
The evidence from Faure’s (2006) study shows that the tendency to file a claim in tort is influenced more by evolutions in substantive law (like the reduction of social security coverage), rather than by changes in procedural aspects. It is claimed that social security led to low compensation pay-outs by El-Al following the plane crash on high rising flats in Amsterdam in 1992 for example. Faure concludes that if its study’s findings were to be confirmed for other legal systems, that this may have important policy implications. ‘’In that context it seems to make less sense to introduce measures to limit the access to justice of accident victims. It would then be more useful to focus on reforms of substantive law that reduce the need for victims to use the tort system at all, e.g. by moving towards (compulsory) first party insurance systems.’’
Quill (2006) was a guest speaker on a Dutch symposium, and spoke about the PIAB. He acknowledged that, in general, claimant and respondents seem to be satisfied about the process. On the other hand, he finds the system inequitable due to an unbalance between claimants and liability insurers. Also, the cost argument would only be in favour of the insurer and awards via the court system tend to be higher. Quill proposed 4 years ago therefore to abandon the PIAB in favour of improvements in the civil process.

Conclusion

It can be concluded that the whole personal injury compensation landscape has changed significantly since PIAB’s incarnation. Firstly, The Board can be said to have contributed somewhat in tackling the cost of administering personal injury claims and in simplifying the procedure, although various aspects of its claims are debatable. As Ilan (2009) points out, there has been no meaningful debate on the retention of a fault based system of legal liability. A system as operating in the Netherlands or New Zealand can be an alternative method to achieve either an increased number of settlements, or the (already) compensated victim would simply lack the incentive to file a claim in tort. It is important to emphasize that such a major reform is not viable in the current economic climate. Thirdly, the public have demonstrated a preference for the involvement of legal professionals in the claims process, and the O’Brien case has brought clarification. The equity issue is not fully rectified, in reference to the poor book of quantum, but this may happen in the near future. PIAB is not a perfect forum for personal injury litigation, but for first instance an improvement to what was in place before its existence.

 

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