The simplest approach (at least in theory) is to discount the multiplier to reflect the issue and avoid double recovery.
It is a well established principle that a Claimant entitled to recover damages can only be compensated once in respect of any head of damage and loss. Similarly, it is a well established principle that a Claimant is entitled to have his care needs met by way of private provision rather than relying on state funding should that be his preference. If an injured Claimant seeks to rely upon state funding to provide care and assistance, or in cases where there is a significant degree of contributory negligence and the Claimant has no option but to rely upon statutory funding to make up the shortfall in his damages, how then can the Court seek to avoid double recovery when assessing the Claimant's award against a negligent tortfeasor?
Whilst the principles are clear and well documented throughout the case law, the application of them has been left to the parties to establish a pragmatic approach towards solving the conundrum.
The simplest approach (at least in theory) is to discount the multiplier to reflect the issue and avoid double recovery.
Alternatively, it is open to the Claimant or more usually the Deputy, to provide an undertaking regarding the repayment of any funding and/or application for such funding (the so called Peters' Undertaking/Peters' Promise).
Neither of the above mechanisms have gained significant traction and in practice, both Claimants and Defendants have embraced the use of the reverse indemnity as an elegant solution to the conundrum of statutory funding and double recovery.
The reverse indemnity allows the parties to agree terms by which the Claimant gives credit for or agrees repayment to the Defendant of a specific amount representing part or all of his or her entitlement to statutory funding as part of the overall settlement agreement. The mechanism can be active, where the Claimant intends to seek or is already reliant upon a regime of state funded care or passive, to enable recovery should the Claimant at some point in the future seek to obtain statutory funding.
The wording of the reverse indemnity can be tailored to the reflect the unique needs of the claim and reflect the extent of the credit to be afforded. Thereafter, the agreed terms can be incorporated into the final settlement Order for approval by the Court. It is worth noting that there is currently no judicial authority to support the proposition that a Court can impose such a mechanism in the absence of the Claimant's consent.
The reverse indemnity in its many guises has generally been embraced by practitioners on both sides of the fence as a pragmatic solution to avoid the risks of double recovery where statutory funding comes into play. It is to be hoped practitioners continue to recognise its benefits when negotiating the settlement of complex claims and work together towards agreeing appropriate terms as part of overall settlement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.