Structured Settlements

Structured settlements are those that are paid over time, rather than as a lump sum. They look set to become increasingly common following a recent study which recommended that they be more widely used and, in particular, that where cases involve children or patients, the court should not approve the settlement of a claim unless satisfied that a structured settlement has been considered. In addition, the costs of reasonable financial advice should be regarded as a cost of the litigation.

It is likely that, over time, the "lump sum" settlement for major claims will cease to be used. The Courts are able to order that where appropriate periodical payments rather than lump sums will be paid to injured parties who bring successful actions in personal injury cases. We have recently started to see examples of this. In the case of Walton v Calderdale NHS Trust the Trust was ordered to pay the claimant – who was nineteen years old with a life expectancy of 70 years – an annual payment of £50,548 in respect of his annual care costs, rather than a lump sum.

Structured settlements are becoming more common in clinical (medical) negligence cases, especially where the actuarial calculations indicate that the life expectancy of the injured party is substantial. For example, the courts recently awarded the largest medical negligence settlement to date, in the UK , to a dancer, who suffered severe brain damage whilst a patient in hospital. The structured settlement awarded is worth an estimated £20 million over time.

Kerstin Parkin, a professional dancer, was awarded the sum from Bromley Hospitals NHS Trust after suffering a heart attack while giving birth to her son Dylan in 1996. The hospital's "crash team" had been unable to get into the maternity unit to resuscitate her because they did not have the necessary security code to open a communicating door. Mrs Parkin could have been treated with "basic first aid", but the delays meant her heart was stopped for twenty minutes, leaving her profoundly brain damaged. As a result, she can move only some facial muscles and will spend the rest of her life in a wheelchair and will require round the clock care.

Mrs Parkin's husband had previously reached a settlement with the Hospital Trust for the psychological trauma resulting from his wife's injuries. The exact sum is not known, though the original claim was for £800,000.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.