The Discount Rate in medical negligence & personal injury claims in Ireland

3 minute read

When it comes to litigation, especially in cases involving medical negligence and catastrophic injuries, compensation is crucial for helping the injured party rebuild their lives. One key concept that affects the amount of compensation awarded is the Discount Rate.

For plaintiffs dealing with long-term care needs and loss of earnings, this rate can have significant consequences.

What is the Discount Rate?

The Discount Rate, sometimes referred to as the real rate of return, is the percentage applied by the courts to adjust the lump sum compensation awarded to plaintiffs in personal injury and medical negligence cases.

The Discount Rate is fixed at 1% for care costs and 1.5% for other losses.

However, the Government’s Discount Rate Independent Working Group has recommended that an expert group should meet at a maximum of every three years to reassess the rate.

What does the Discount Rate aim to achieve?

The principle behind the Discount Rate is simple: when a plaintiff is awarded a lump sum today to cover future losses, such as medical expenses, loss of earnings or care costs, it’s assumed they will invest that sum.

As a result, the court reduces the award based on the assumption that the plaintiff will earn interest or investment returns on the lump sum before they need to spend it on those future expenses.

An example of the Discount Rate in practice

For example, if the court awards a plaintiff compensation for a future medical procedure expected in 10 years, the lump sum is reduced by the expected return on investment over that time. This reduction is the Discount Rate. The lower the rate, the higher the compensation, and conversely, a higher rate leads to a lower award.

Why does this matter to plaintiffs?

For plaintiffs, particularly those who have suffered catastrophic injuries or been victims of medical negligence, the Discount Rate has a profound impact on the final compensation they receive.

In Ireland, many claims involve lifelong care and significant future costs, such as:

• Ongoing medical treatment
• Rehabilitation
• Adaptations to living environments.

In these cases, the compensation needs to cover years, if not decades, of expenses.

If the Discount Rate applied is too high, it assumes that the plaintiff can generate substantial investment returns on their lump sum. This could mean that the awarded compensation is insufficient to cover the actual future costs, placing the plaintiff in a financially precarious position.

For instance, if a severely injured individual receives compensation for 30 years of care, an overly optimistic Discount Rate could leave them without sufficient funds mid-way through that period.

Why legal representation matters

The Discount Rate and its implications remains critical factors for plaintiffs, particularly in medical negligence and catastrophic injury cases. Solicitors who specialise in this area are crucial for ensuring their clients receive fair compensation that addresses their long-term needs.

Choosing an experienced medical negligence & personal injury law firm

While the Discount Rate is now fixed at 1% for care costs and 1.5% for other losses, experienced solicitors ensure the court considers all relevant factors, such as the plaintiff’s future care needs.

In some instances, plaintiffs may benefit more from periodic payment orders (PPOs), which avoid risks associated with lump sum investments and offer greater financial security.

Augustus Cullen Law are experts in medical negligence & personal injury claims

Our medical negligence and personal injury claims departments are among the most respected in Ireland.

If you require legal advice, Contact Us to speak with an expert. Or, you can learn more about our services by visiting Medical Negligence Claims or Personal Injury Claims.

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