High Court decision from November 2020 in the case R (on the application of Aviva Insurance Ltd and Swiss Reinsurance Co Ltd) v. Secretary of State for Work and Pensions [2020] EWHC 3118 (Admin).
The High Court found that defendant insurers do not have to repay to the government all of the state benefits paid to the successful Claimant.
The reason was that it was incompatible with Article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms, i.e. the entitlement to the peaceful enjoyment of his possessions; Article 1 states that “no one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.”
Specifically they held that the Social Security (Recovery of Benefits) Act 1997 was incompatible in 3 ways:
a) The requirement to repay 100% of the recoverable benefits even where the underling claimant (i.e. the person seeking compensation) is found to be contributorily negligent;
b) The requirement to repay 100% of the recoverable benefits even where the underlying claimant’s “divisible” disease is in part unconnected with the insured’s tort; and
c) The requirement to repay 100% of the recoverable benefits even where other tortfeasors would normally be liable for an indivisible disease but they or their insurer cannot be traced.
What does this mean in practice? It will become clearer when the parties make further submissions with regard to the remedies in that case.
The case was brought by insurers for the defendant in an industrial disease case. They were challenging having to pick up the tab for all state benefits even if the claimant was found to have been contributorily negligent, or certain heads of claim were not proved or there was compromise. Therefore it will have most direct force in industrial disease cases. However, I would have thought it would have strong persuasive power in all PI & Clin Neg cases. The court found that the 1997 Act was incompatible with Article 1 from the date the Human Rights Act 1998 came into force (2nd October 2000).
This adds a lot of uncertainty for the next little while until issues can be clarified. However, it raises the possibility of the insurers NOT having to pay back as much to the CRU. If they don't have to pay it back to the CRU then they shouldn't be making the corresponding reduction in damages to the Claimant. Interesting. Certainly with disease cases settled from 2nd October 2000 onwards there may be the an argument for examining them to see if the insurers can claim reimbursement for over-recouped state benefits and thus further compensation for the claimants (or their estates). Would the same go for general PI & Clin Neg? I could see a bit of an industry developing in reopening settled disease cases and challenging the settling insurer for return of 'over-recoupments', causing them to challenge the CRU for return of these sums.
Here is a link to the full judgment from 20th November 2020: https://www.bailii.org/ew/cases/EWHC/Admin/2020/3118.pdf
Here is a link to the follow up judgment on this case handed down on 12th January 2021: https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Admin/2021/30.html
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