Insurance cost hikes loom after ruling on injuries

Insurance companies could be forced to hike premiums following an historic Appeals Court ruling which opens the way for higher compensation awards for people who suffer catastrophic injuries.

The court upheld a €15.9m award made to nine-year-old Gill Russell from Aghada, Co Cork, who suffered brain damage at birth and has dyskinetic cerebral palsy.

The unanimous decision will have major implications for the HSE, the State, and the insurance industry. The HSE had urged the Court of Appeal to reject the approach taken by the High Court when assessing the massive damages for the boy, who needs life-long care.

That High Court decision last year was ground-breaking because it altered the existing position where money for future care and expenses is awarded on the assumption, when invested, it will gain interest at an annual rate of 3%. The Appeal Court ruled labelled those investment risks as “unjust and unacceptable” and upheld the decision of Mr Justice Kevin Cross to reduce that to 1.5% — meaning higher awards.

A separate hearing will take place at a later date of the HSE’s appeal concerning the annual sum the boy is likely to require throughout his life to meet ongoing care and other ancillary needs.

Through his mother, Karen Russell, of Aghada, Co Cork, Gill sued the HSE alleging negligence in the circumstances of his birth at Erinville Hospital, Cork, on July 12, 2006.

It was claimed that Gill was born after his mother had a symphysiotomy and there was a “prolonged and totally chaotic” delivery. Liability was admitted and the High Court was asked only to assess damages.

His case was adjourned in 2012 with an interim payment of €1.4m in anticipation of periodic payments legislation. When that did not materialise, he received an additional lump sum payment of €13.5m last year. The HSE and Cork University Maternity Hospital apologised as part of the settlement.

After yesterday’s judgment, solicitor Ernest Cantillon, representing Gill and his family, said Karen Russell “is relieved that she can know with certainty Gill will have sufficient funds to provide for his care in the future”. This decision applied only to a small number of catastrophically injured persons and should not be regarded as “a windfall” but rather “a vindication of the rights of the most vulnerable,” he said.

“The way the courts calculated damages in big cases has been wrong with the result that people have been under-compensated,” Mr Cantillon said. If such persons run out of funds, they will be unable to pay the carers who “provide them with the wherewithal to get through each day”, he added.

Giving the Appeal Court’s judgment, Ms Justice Mary Irvine said the “sad fact” was neither this child, nor the HSE, would be in court had governments not failed over decades to enact laws allowing compensation be paid via periodic payment orders.

The “frailty and injustice” of the “grossly outdated” lump sum system of compensation remains, regardless of whatever real rate of return, or discount, is used in its calculation, she said.

The HSE is likely to appeal the ruling.