A schoolgirl has become the first reported recipient of more generous damages made possible through changes to the discount rate applied to personal injury settlements.
The High Court settled its first case last week under the new rate of minus 0.75%, following last month’s decision by justice secretary Liz Truss to reduce it from 2.5%.
The claimant, 10, was left with cerebral palsy following complications at birth, was awarded a capitalised settlement of around £9.3m, up from £3.8m. The court approved the agreed quantum settlement in LMS v East Lancashire Hospitals NHS Trust on the basis that she was to recover 50% of the full value of her claims calculated at the minus 0.75% rate.
At a joint settlement meeting in January, it was agreed the claimant would receive a lump sum of around £1.3m. She would also receive periodical payments of £50,000 per year to age 19 and thereafter for life £73,500 per year, subject to court approval.
Leonie Millard, of north-west firm Forbes Solicitors, who represented the claimant, said the benefit for her client was ‘immense’ and vastly improves the long-term financial ability to meet her needs for the rest of her life.
Michael Redfern QC, of St John's Buildings, counsel for the claimant, added: ‘We welcome the new discount rate, the first change in 17 years, which addresses the actual lack of meaningful return on safe lump-sum investment opportunities.
‘The only person to benefit from the new discount rate is the claimant. It has no impact on legal costs.’
While claimant lawyers and victims may welcome the first settlement, the backlash appears to have already begun. The Guardian reported the ‘controversial’ award will ‘cause shockwaves’ in the health service and to insurance companies.
The Association of British Insurers was quoted as saying a number of its members have increased premiums as a result of Truss’s decision.
The government has set aside around £6bn to cover the increased cost of settling clinical negligence claims, with the Office for Budget Responsibility saying car insurance premiums could be forced up by 10%.
Insurers hope to persuade chancellor Philip Hammond to reverse the decision and bring forward legislation for an immediate change in the way the rate is calculated.