The rising tide of periodic payment orders

The concerns over periodic payment orders (PPO) are rising all the time. PPOs are periodic payments by insurers for injured people needing lifelong care. Where awarded, PPOs replace the certainty of a lump sum with the uncertainty of an index-linked amount payable to a claimant annually for the rest of their lives, possibly 50 years or more.

Here are five landmark PPOs:
 
Cerys Edwards awarded up to £15m, February 2012

Mitsui could pay out as much as £15m over the course of six-year-old Cerys Edwards’s (pictured) life in what is thought to be one of the largest PPOs ever made.

Cerys was a toddler when a food tycoon’s son, Antonio Boparan Singh, crashed his car head-on into the car she was in. Mitsui agreed to pay out £5m in a lump sum and £450,000 each year for the rest of  Cerys’s life to pay for the 24-hour care she needs. It has already paid out £4m.

Following the payout at Birmingham’s High Court in February, Mitsui said in a statement: “Mr Boparan’s liability for the accident that caused Cerys’s injuries had been admitted in 2008.

“We would like to express our profound sympathy for the catastrophic injuries suffered by Cerys and for the suffering of her parents.”

Thompestone v Tameside NHS Trust, 2008

The landmark Thompstone v Tameside medical negligence judgement in January 2008 confirmed that PPOs could be linked with wage inflation instead of price inflation and made PPOs more desirable as wages usually increase faster than prices. This resulted in the swift increase in PPOs seen in the past three years.

Kevin Clark estimated £6.8m, 2007

Prior to the award to Cerys Edwards, Mr Clark was thought likely to have received the biggest PPOs ever made. After a road traffic accident in 2004 left him paralysed, he received a lump sum of £1.35 million plus annual payments of £280,000 for the rest of his life. Over the course of his lifetime, he expects to receive damages totalling £6.8 million.
 
Leeds judge imposes early PPO, 2005

One of the first ever PPOs, Mr Justice Mitting imposed a PPO in the case of Godbald vs Mahmood at Leeds High Court in 2005. The judge ordered the defendant to pay £50,000 per annum index linked, rising to £61,000 per annum in October 2009, payable for the rest of the claimant’s life.
 
Motor Insurers’ Bureau pays up for uninsured driver, 2005

The MIB paid out after an uninsured driver travelling on the wrong side of the road hit a pensioner, driving in his 1952 Series MM Morris. Therefore, the cost of the PPO had to be picked up by the MIB which is the fund of last resort for victims of uninsured drivers. The MIB argued in court that the brain-damaged victim’s compensation should be reduced because he did not fit a seatbelt into his classic car. However, the argument did not gain ground with the judge. The victim, who now requires 24-hour care, was awarded a lump sum of £450,000 and payments of £25,000 a year, increasing to £45,000 in November last year.