NHS compensation payment and Pension Credit

Client’s husband died from cancer and NHS Trust has admitted negligence and his widow stands to receive £55,000 in compensation. She currently receives Pension Credit Guarantee Credit, Housing Benefit and Council Tax Support.

The provisions of para.16 of Schedule V (‘PART I Capital disregarded for the purpose of calculating income’) of the State Pension Credit Regulations 2002 allows for the whole amount of the payment to be disregarded indefinitely:

16.—(1) An amount equal to the amount of any payment made in consequence of any personal injury to the claimant or, if the claimant has a partner, to the partner.

However, the DMG states:

84412 The disregard at DMG 84410 [that is the disregard above] does not apply if the injury was to a claimant’s deceased partner1 . Payments can only come within this disregard where the claimant or partner for whom the payment was made themselves suffered a physical and/or psychological injury. If there is any doubt as to what the payment was awarded for, then the DM should request sight of the papers awarding the amount. These should specify on what basis the award was made.

1 R(IS) 3/03

I can’t find R(IS) 3/03 but is seems pretty clear that DWP aren’t going to disregard this payment - this feels very unfair to me, as the client has just lost her husband in very distressing circumstances but now she’s being compensated for that, she stands to lose all of her MTB’s as well.

With WAB’s, it looks as if the PI payment could be disregarded for up to 52 weeks but I can’t see anything similar in the PC regs. Anyone got any ideas on this case, or a copy of R(IS) 3/03 they could share?

Got no comments, but I believe this is the case you mention:

https://administrativeappeals.decisions.tribunals.gov.uk/Aspx/view.aspx?id=903

Thanks Charles, that’s helpful.

R(IS) 3/03 says

“Held, dismissing the appeal, that:
1. even if the effect of regulation 23(1) of the 1987 Regulations was that the reference to “claimant” in paragraph 12 of Schedule 10 should be read as including a reference to the claimant’s partner (which the Commissioner doubted), he had ceased to be her partner on his death (paragraphs 7-11);
2. the argument based on the contention that the husband’s personal injury claim had become that of the claimant on his death was fallacious, because the issue under paragraph 12 of Schedule 10 was not who was beneficially entitled to the cause of action, but who suffered the personal injury (paragraph 12); “

Para. 12 of Sch. 10 currently reads “Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant or the claimant’s partner, the value of the trust fund and the value of the right to receive any payment under that trust.”

*BUT*

“or the claimant’s partner” was inserted in 2006 post the commissioner’s decision.

So, I don’t think that the decision is relevant here and suspect that the DMG may not have been updated to reflect the changes in regulation.

The case was dealing with the position prior to the amendments and the claimant argued that a personal injury incurred by the deceased partner ought to be disregarded. The commissioner held that the regulations then in force did not have that effect but that even if they did the appeal would have failed because a person who has died has ceased to be the claimant’s partner for benefits purposes - see para 8. The decision is obiter on this point but the logic is difficult to fault.

Your client is certainly entitled to sympathy, but I don’t see that a disregard would apply for any benefit. The DWP would say that the point of the disregard is because substantial PI damages are often funds which are already spoken for (e.g. to pay for future private therapies or treatments etc) whereas the damages paid in relation to the husband’s death are, of necessity, essentially unrestricted funds.

But the failings occurred before death when he was her partner.

Thanks both. I did indeed spot the amendment to the wording and I’m feeling like I’m more persuaded by Elliot’s argument but then like Gareth, I’d like to see it argued all the same.

16.—(1) An amount equal to the amount of any payment made in consequence of any personal injury to the claimant or, if the claimant has a partner, to the partner.

The trouble is, the wording above is framed in terms of the claimant “has” a partner - as Elliot notes, she palpably doesn’t now, so although I think you can construe this as saying “any payment” as applying to her actually receiving the payment as a consequence of a PI to that partner, it’s difficult to see how to argue the second strand - she doesn’t have a partner although she obviously did in the past.

sorry but I am confused (not for the first time I should say) .......so…is the conclusion of this discussion that the regs changed after R(IS) 3/03 so as to include the claimant’s partner in the disregard and that - as such - the value of any “PI compensation” (which in these circs would normally go to the deceased’s estate /in this case ultimately to his spouse) is to be disregarded ?

.....are we (or are we not) saying that it does not matter what the DMG appears to say currently as it may simply be out of date/out of step with the amended regs?? ....the different posts seem to draw differing conclusions???

Presumably the money would have to be subject to entrustment to be disregarded at all beyond the 52 weeks???

perhaps others have read differently ???

...and yes, does partner mean a partner who as since passed away? (the argument for me would lie especially if the deceased partner was also part of a previous claim for the same benefit now being claimed)

I completely see the logic in the “earmarked” funds approach ....but of course not all of a PI award would necessarily be in respect of heads of future care or loss of earnings or similar ...some of it would be simple compensation

Where I’m at with the amended wording in the relevant para of the Schedule is that any payment made as a consequence of a personal injury to either the claimant or their partner is disregarded indefinitely for PC purposes.

However, that relies on both partners being alive. In this case, the PI payment is made to the wife in respect of a personal injury to her now deceased partner. That’s where the problem lies - because he has already died, I’m not convinced from wording of the para and the findings of R(IS) 3/03 that we could argue a payment made in these circumstances falls to be disregarded unfortunately.

I’ve advised our adviser that the client can look to appeal this ultimately to the UT if she wants to test this.

Peter Donohue - 05 August 2021 01:45 PM

sorry but I am confused

The Reg states:

An amount equal to the amount of any payment made in consequence of any personal injury to the claimant or, if the claimant has a partner, to the partner.

That means that if either (a) the claimant or (b) their partner - i.e. the person who is actually included on their award as partner - holds capital as a consequence of a personal injury to either one of them, it is disregarded either for 52 weeks or indefinitely if held in a trust.

In this case the funds have been paid in consequence of a personal injury. But the personal injury is to a person who is not, at this point in time, either the claimant or the claimant’s partner. The personal injury is to a person who was, but no longer is, the claimant’s partner - because the husband ceased to be a party to the claim on his death. The disregard does not apply to funds which are paid as a consequence of personal injury to a person who is, in real time, no longer the claimant’s partner.

I think Gareth would say - well the funds were paid in relation to an injury which occurred to somebody who was the claimant’s partner at the time the injury was incurred, so was the injury not to the claimant’s partner in that sense? I don’t think this works because this would be to read into the regs a backwards-looking aspect which I don’t think is there. Para 8 of R(IS)3/03 supports that reading, but I think it would be true even if there were no authority on it. But Gareth could be right and I could be wrong.

I’m not arguing with any confidence but I do think that the aim has to be considered.  The term is ‘compensation’. It isn’t money that is to be paid to pay for services or future needs, it is compensation for injury.  The injury, of this sort, has been committed while there is a partner and the consequence was death but the compensation was for the injury, even if the quantum is related to the consequence.  If the meaning is to exclude *any* compensation related to death then that would seem to be a bit unjust (sorry to bring the concept of justice into a benefits discussion).

Hi - yes, I am fully with it now and I also now read it all to likely mean remaining partner A (present claimant) can only really benefit from the disregard if deceased partner B (the compensated party)  was and remains present within the current claim.

It is, as has been said,  potentially open to some interpretation. If we had a claimant in similar circs, say, who was not the partner of the deceased at the time of the injury…or if the claim for PI had not been made or resolved when they were partners….or if the PI claim was only initiated post mortem by the remaining partner then there might well be differing outcomes in all these situations??

that is all a bit academic to the issue at hand here though ....but thanks for this useful discussion

Gareth Morgan - 05 August 2021 03:31 PM

I’m not arguing with any confidence but I do think that the aim has to be considered.  The term is ‘compensation’. It isn’t money that is to be paid to pay for services or future needs, it is compensation for injury.  The injury, of this sort, has been committed while there is a partner and the consequence was death but the compensation was for the injury, even if the quantum is related to the consequence.  If the meaning is to exclude *any* compensation related to death then that would seem to be a bit unjust (sorry to bring the concept of justice into a benefits discussion).

I don’t disagree with you at all on this Gareth, as I said above. It’s just difficult to see how to argue that within the restrictions of the current legislation but let’s see what the adviser comes back with - who knows, maybe we will take it to the UT?