Part 8 – Recovery from Compensation Payments
Section 19: Recovery of value of assistance from compensation payments
96.A person affected by accident, injury, or disease due to the fault of a third party may be entitled to compensation. Depending on the nature of their accident, injury, or disease they may also be entitled to social security assistance.
97.The provisions in the Act will allow the Scottish Government to recover relevant forms of Scottish assistance from awards of compensation, avoiding the risk of a person being ‘doubly compensated’ for the same incident. They largely mirror the provisions of the Social Security (Recovery of Benefits) Act 1997, with the intention that, in this area, devolved assistance will be treated in the same way as reserved benefits. Essentially, the provisions require that where a person is making a compensation payment to an individual who has received assistance, they must deduct the value of that assistance from the amount paid to the individual and pay it instead to the Scottish Ministers.
98.Section 19 inserts a new Part 6A into the 2018 Act. This consists of a series of sections making provision for recovery from compensation payments.
99.Inserted section 94A sets out that the Part applies where a person is to make a payment to an individual in consequence of accident, injury or disease, and relevant assistance has been received by that individual in respect of that accident, injury or disease. The provisions only apply where the accident or injury takes place, or the person claims assistance in relation to the disease, on or after the date on which this section comes into force.
100.This extends to payments by a person who is or may be liable, as well as payments under the compensation schemes mentioned in subsection (2). Liability for the accident, injury or disease is not affected by the provisions and so the test is simply whether a payment has been made. However, certain payments are excluded and they are listed in Part 1 of schedule 12 inserted into the 2018 Act. The Scottish Ministers have a power to vary this list by regulations which will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act). Section 94A(5) allows the Scottish Ministers to make regulations about the recovery of payments made under schemes which make lump sum payments, where a compensation payment has also been made. Although the Scottish Ministers do not currently administer any such schemes, this will allow any provision to be made in relation to any future schemes. Regulations must specify the lump sum payments to which they apply. Subsection (6)(b) sets out the kind of detail which may be included in regulations. Regulations are subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act).
101.Section 94B(1) sets out the definitions used in this Part. In particular, it defines “relevant assistance” as being assistance listed in column 2 of the table in Part 2 of schedule 12 inserted into the 2018 Act, as well as short-term assistance (defined in section 36 of the 2018 Act) given as a result of its reduction or cessation. Subsection (2) allows the Scottish Ministers to modify the definition of relevant assistance, or the table in Part 2 of schedule 12 (which would have the effect of modifying what was included in the definition).
102.The definitions of “relevant period”, “relevant period start date” and “relevant period end date” have the effect that assistance will be recovered in respect of a period of five years from the date of the accident or injury occurring (or the individual claiming assistance for the disease, since a disease will not have an easily identifiable start date). Once a compensation payment is made, the five year period stops running and the amount of assistance is calculated up to the date the compensation payment is made.
103.Section 94C requires a compensator, as defined in section 94B, to apply for a certificate of recoverable assistance before making a compensation payment and sets out the process related to that application. The Scottish Ministers may by regulations prescribe periods within which certificates must be issued: if they do not do so, certificates must be issued within 4 weeks of receipt by the Scottish Ministers. Regulations will be subject to negative procedure (as the new regulation making power will be added to the list in section 96(3) of the 2018 Act).
104.Section 94D details the information to be contained in certificates of recoverable assistance. This is the amount of assistance which has been (or is likely to be) received during the relevant period (as defined in section 94B). If the certificate is issued before the relevant period ends (for example, before the compensation payment is actually made) then it must include details of assistance which is likely to be received. Amounts, rates or periods may be based on reasonable estimates if the actual figures are not available.
105.The Scottish Ministers must send the information contained in the certificate to the recipient of the compensation payment. If that person or the compensator requests it, they must also provide details of the way in which any amount, rate or period specified in the certificate has been determined, in a way in which the person can share with others (mirroring other provisions of the 2018 Act where information is provided by the Scottish Ministers).
106.Section 94E provides that the compensator is to pay to the Scottish Ministers an amount equal to the amount of the recoverable assistance within 14 days of the compensation payment being made (or, if later, within 14 days of the certificate of recoverable assistance being issued).
107.Section 94F allows the Scottish Ministers to issue a demand for payment if the amount due under section 94E is not paid on time. If no certificate of recoverable assistance has been issued, the Scottish Ministers must issue one with the demand for payment. The amount shown in the demand for payment is recoverable as if a sheriff had issued a decree with a warrant for execution, which allows the Scottish Ministers to take immediate action for debt recovery.
108.If the compensator pays the Scottish Ministers an amount for which they were not liable, section 94G requires the Scottish Ministers to pay the compensator the difference between the amount they paid and the amount they should have paid. The Scottish Ministers must provide details of the calculation to the compensator and the person who received the compensation payment, and issue a new certificate of recoverable assistance. Where the compensator deducted recoverable assistance from the compensation payment it made, the compensator must recalculate the amount and pay any increase in the compensation payment to the person who received the original compensation payment (but only when the money is received from the Scottish Ministers).
109.For example, if the compensator paid the Scottish Ministers £2,000 when there was only £1,500 of recoverable assistance, the compensator would have to pay the difference of £500 to the person who received the compensation payment.
110.Section 94G does not apply where section 94P applies, because that section sets out a different procedure for recalculation following a reconsideration or appeal.
111.Section 94H ensures that the provisions of this Part will apply where it is an insurer rather than the compensator themselves who is ultimately funding the compensation payment. The Scottish Ministers may by regulations limit the liability of insurers.
112.Section 94I has the effect that if the Scottish Ministers fail to issue a certificate of recoverable assistance, the compensator need not deduct the amount of recoverable assistance from the compensation payment nor pay it to the Scottish Ministers. However, if a compensator does in fact make a payment despite this section, it is treated in the same way as any other payment and the Scottish Ministers do not have to repay it.
113.Section 94J requires the compensator to make a calculation deducting any recoverable assistance from each relevant head of compensation as set out in the table in Part 2 of schedule 12. That may have the effect of reducing the compensation payment to nil (but not beyond that: an injured person cannot be required to make a payment to the compensator or the Scottish Ministers). A payment calculated in this way satisfies the compensator’s liability to make the compensation payment. If the payment is reduced to nil, the compensator must provide a statement setting that out.
114.Section 94K applies instead of section 94J where the payment is made under the Diffuse Mesothelioma Payment Scheme. It simply requires the compensation payment under that scheme to be reduced by the amount of recoverable assistance (which may reduce the compensation payment to nil). As in section 94J a payment calculated in this way satisfies the scheme administrator’s liability to make the compensation payment. If the payment is reduced to nil, the scheme administrator must provide a statement setting that out.
115.Section 94L requires that the person receiving a compensation payment be provided with details of how the payment has been calculated and the date on which payment is made, in such a way that they have a record they can share with others. Subsection (5) prevents the recoverable assistance from being deducted twice, by providing that the calculation of the gross compensation payment (or an award of damages made by a court) must not take into account the recoverable assistance.
116.Section 94M provides for a certificate of recoverable assistance to be reviewed by the Scottish Ministers. An application for review can be made by a compensator (but not the scheme administrator of the Diffuse Mesothelioma Payment Scheme) or, if the compensation payment is to be reduced under section 94J or 94K, the injured person or another person who would receive the payment. The Scottish Ministers may also conduct a review on their own initiative. Any review must take place before the compensation payment is made and before any payment to the Scottish Ministers under section 94E. In particular, if the compensator makes a compensation payment without applying for a certificate of recoverable assistance, and one is issued under section 94F, the compensator will not be able to request a review of it.
117.The Scottish Ministers are to make regulations setting out further details of the review process and any request for a review will have to meet these requirements. Regulations will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act). The Scottish Ministers may decide that something purporting to be a request for a review is not valid and if they do so, must inform the person who made the request.
118.Following a review, the Scottish Ministers may confirm the certificate of recoverable assistance, issue a modified certificate or revoke the certificate, and must give everyone who would have been entitled to ask for a review notice of the result of the review and the reason for that, in a way that leaves them with a record they can share with others. The Scottish Ministers cannot increase the total amount of recoverable assistance unless that is required because the person who applied for the certificate supplied incorrect or insufficient information (for example, the person gave the wrong dates for the relevant period).
119.Section 94N provides for a certificate of recoverable assistance to be reconsidered by the Scottish Ministers. A reconsideration can only be requested after payment to the Scottish Ministers under section 94E has been made and any claim giving rise to the compensation payment has been disposed of (bearing in mind that there may not be a claim if the compensation payment is being made voluntarily). An application for reconsideration can be made by a compensator who applied for or was issued with the certificate of recoverable assistance (but not the scheme administrator of the Diffuse Mesothelioma Payment Scheme) or, if the compensation payment is to be reduced under section 94J or 94K, the injured person or another person who has received the payment (or who has been treated as receiving it, where the compensation payment was reduced to nil under section 94J or 94K). There are limited grounds for reconsideration which are set out in subsection (6). The Scottish Ministers may by regulations make further provision about the process for requesting a reconsideration. Those regulations will be subject to negative procedure (as the new regulation making power will be added to the list in section 96(3) of the 2018 Act).
120.Following a reconsideration, the Scottish Ministers may confirm the certificate of recoverable assistance, issue a modified certificate or revoke the certificate, and must give everyone who would have been entitled to ask for a reconsideration notice of the result of the reconsideration and the reason for that, in a way that leaves them with a record they can share with others. The Scottish Ministers cannot increase the total amount of recoverable assistance unless that is required because the person who applied for the certificate supplied incorrect or insufficient information (for example, the person gave the wrong dates for the relevant period).
121.Section 94O allows a person who is given notice of a reconsideration (other than the scheme administrator of the Diffuse Mesothelioma Payment Scheme) to appeal to the First-tier Tribunal for Scotland against the reconsideration. Subsection (5) sets out the limited grounds on which an appeal may be made.
122.On an appeal, the First-tier Tribunal may confirm the certificate of recoverable assistance, specify variations to be made or order the Scottish Ministers to revoke the certificate, and the Scottish Ministers must action those decisions accordingly.
123.Section 94P provides for the recalculation of payments where the certificate of recoverable assistance is reissued as a result of a reconsideration or appeal. It does not need to apply to reviews, because a review can only be brought before a payment has been made.
124.Any difference between what should have been paid by the compensator to the Scottish Ministers and what was actually paid is to be paid to or by the Scottish Ministers as the case may be. The Scottish Ministers must send a statement detailing that to the compensator and the person to whom the compensation payment was made. Where the compensator deducted recoverable assistance from the compensation payment it made, the compensator must recalculate the amount and pay any increase in the compensation payment to the person who received the original compensation payment (but only when the money is received from the Scottish Ministers).
125.If the injured person or the person who received the compensation payment supplied incorrect or insufficient information, and that is why a new certificate was required after reconsideration or appeal, then the compensator may require payment from that person of the increased amount which they are required to pay to the Scottish Ministers.
126.For example, if an injured person supplies the wrong dates to the compensator so that less recoverable assistance is deducted from a compensation payment, and that comes to light on reconsideration, then the injured person would be liable to pay the compensator the increased amount which is due to the Scottish Ministers.
127.Section 94Q applies where multiple compensation payments are made in respect of the same injured person and the same accident, injury or disease. This may occur, for example, if an injured person has requested an interim compensation payment from a single compensator to help with adverse personal circumstances arising from an accident, injury or disease. This may happen in the case of serious injuries, such as brain injury claims, spinal injury claims, serious medical injury claims and mesothelioma claims. There could also be occasions when multiple compensation payments are to be received from different compensators.
128.In circumstances where an earlier payment has been made to or in respect of an injured person, and subsequently a second, later payment is made to or in respect of the same injured person as a result of the same accident, injury or disease, the Scottish Ministers must determine the liability of the compensator for the second payment based on the total amount of recoverable assistance with a reduction for any amount already paid to the Scottish Ministers when the earlier compensation payment was made. This means that if sums due in relation to the recoverable assistance have already been recouped by the Scottish Ministers in relation to the first compensation payment, they will not be recouped a second time.
129.If the compensator does pay more than was due because the certificate of recoverable assistance does not reflect the earlier payment, the Scottish Ministers must pay the difference to the compensator. The Scottish Ministers must send a statement detailing the amounts to the compensator and the person to whom the compensation payment was made. Where the compensator deducted recoverable assistance from the compensation payment it made, the compensator must recalculate the amount and pay any increase in the compensation payment to the person who received the original compensation payment (but only when the money is received from the Scottish Ministers).
130.If the two payments are being made by the same compensator, the compensator may treat the two payments as aggregated and made on the date of the later payment, as set out in subsection (6).
131.The Scottish Ministers may by regulations make provision about the timescales for payments of any amounts due under this section. They may also make further provision for cases in which multiple compensation payments are made by multiple compensators in respect of the same accident, injury or disease. Those regulations will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act).
132.In situations of serious injury where it has been decided that settlement by way of a single lump sum payment is not appropriate, the court can decide that all or part of the damages will be paid in the form of a continuing series of regular payments. These payments are known as periodical payments and involve the injured party receiving a regular payment for the rest of their life. Section 94R deals with the situation where an agreement is entered into for periodical payments to be made to an injured person (whether or not with lump sum payments).
133.Subsection (2) treats the periodical payments as aggregated into a single amount paid on the date of settlement, so that the compensator does not have to obtain a certificate of recoverable assistance every time a payment is made. The relevant period is treated as ending on the day of settlement, as defined in subsection (5), so that no further recoverable assistance will be deducted from payments made. However, if there is a payment made which falls outside the agreement, it will be treated as a compensation payment in the usual way and the relevant period will not be treated as having ended in relation to that payment.
134.Where another person is in fact making the payments (for example, because they are providing an annuity funded by the person who is liable), it is the person who is liable who is treated as the compensator and not the person making the payments.
135.Section 94S provides that where making an order for compensation, the court must specify the amount of the compensation payment which is attributable to each head of compensation listed in the table in Part 2 of schedule 12, so that that can then be used to make the calculation of the compensation payment under deduction of recoverable assistance.
136.Section 94T allows the Scottish Ministers to make regulations about the information to be provided where compensation is sought in respect of any accident, injury or disease. Subsection (2) sets out what the regulations are to contain. This is to ensure that the Scottish Ministers are provided with sufficient information to be able to recover assistance from compensation payments. Those regulations will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act).
137.Section 94U allows the Scottish Ministers to make regulations about the investigation of any matter relating to the application of this Part to any payment made in consequence of accident, injury or disease suffered by an individual. This is to ensure that the circumstances of such payments can be properly investigated where required. Those regulations will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act).
138.Subsection (2) sets out particular matters which may be included in the regulations. In particular, this allows for powers of entry to prescribed premises, and the creation of offences for obstructing an authorised person in their investigations or failing to comply with requirements as to the provision of information. The maximum penalty for such offences is a fine not exceeding level 3 on the standard scale (£1,000 at January 2025). The statutory time bar in section 136 of the Criminal Proceedings (Scotland) Act 1995 will automatically apply to these offences because they are statutory offences triable only summarily.
139.Sections 94V and 94W deal with the interaction between this Part and the equivalent provisions which apply in the rest of the UK (in England and Wales, the Social Security (Recovery of Benefits) Act 1997 and in Northern Ireland, the Social Security (Recovery of Benefits) (Northern Ireland) Order 1997, in each case as amended and supplemented by regulations).
140.Section 94V allows the Scottish Ministers to modify this Part to make provision about the relationship between this Part and the enactments applying in the rest of the UK where both this Part and those enactments apply. This could happen, for example, if an individual who is to receive a compensation payment receives benefits in England and then moves to Scotland and receives recoverable assistance.
141.Section 94W allows the Scottish Ministers to modify this Part to make provision about the recovery of payments from a compensator where the compensation payment falls under the equivalent provisions in the rest of the UK but the compensator is resident in Scotland.
142.Regulations under sections 94V and 94W will be subject to affirmative procedure (as the new regulation making power will be added to the list in section 96(2) of the 2018 Act).
