by Martha Wilson December-18-2013 in Healthcare Law
Tough economic times increase the risk for co-defendants in litigation, along with their insurers/indemnifiers, that one of them could end up footing the bill for a full award of damages - even if they have only been found partly responsible, explains Martha Wilson.
Under Part III of the Civil Liability Act 1961, where two or more people are responsible to a third party (the plaintiff) for the same injury or damage, they are considered to be “concurrent wrongdoers” and are each liable for the whole of the damage in respect of which they are concurrent wrongdoers. Therefore if a plaintiff sues two defendants who are concurrent wrongdoers and both are found liable to some degree for the damage, the plaintiff can execute the whole award against either or both of them. So far, so good. But look at it this way: even if you (as a concurrent wrongdoer) are found to be only 1% liable, the plaintiff can look to you for 100% of the award.
This Section has been around for a long time. But adverse economic conditions mean increased exposure for co-defendants with money, or their insurers and indemnifiers, since a plaintiff will obviously look to the better mark for damages to meet the award.
In the healthcare context we see this arising as an issue, for example, where a patient sues both the treating consultant and the clinic where treatment was carried out and the clinic goes into liquidation. Suing a company in liquidation is risky and expensive. It may not make commercial sense if the company is insolvent and it is also subject to restrictions on whether or not the court will allow the action to continue at all.
Earlier this year the High Court granted a winding up order to the Harley Medical Group (Ireland) Limited on grounds that it was unable to pay its debts. The Harley Medical Group ran cosmetic surgery clinics in Ireland and elsewhere, and a cohort of Irish women received Poly Implant Prosthese (PIP) breast implants at the clinic. The PIP implants are allegedly defective and studies showed a risk that the implants could leak industrial (rather than medical) grade silicone gel after being placed. The winding up order posed considerable hurdles for the women who issued proceedings arising from the placement of PIP implants and the State announced earlier this year that it would step in to fund the cost of removing the implants where this was deemed medically necessary. This was an exceptional case and the State cannot be expected to pick up the tab for insolvent companies across the board.
Part III can also arise where two doctors are sued and one of them, in breach of their professional obligations, does not have adequate professional indemnity cover or if there is an unpaid excess on the policy. The patient is more likely than not to look to the indemnified doctor to cover the award since the un-indemnified party is unlikely to have the personal wealth to meet a significant award.
What can disgruntled defendants do? They can subsequently sue the other concurrent wrongdoers for an indemnity or contribution seeking to recoup as much of the award they feel they should not actually have been liable to pay. This effectively entails a second set of proceedings with the associated cost and delay, and it may not be worthwhile if the concurrent wrongdoer simply does not have the assets to meet the claim. Consideration can also be given to whether there is anyone else with money to meet the claim who should be joined to the proceedings – for example, directors of the company in liquidation - although the facts of the case will be relevant to whether or not the corporate veil should be lifted. The role of Part III of the 1961 Act highlights the importance, from the defence perspective, of keeping co-defendants part of the action in an endeavour to share liability. It can also make the idea of early settlement involving all defendants an attractive way forward.
From the plaintiff’s perspective, proceeding against an insolvent defendant is risky. Section 62 of the Civil Liability Act 1961 may provide relief in the context of litigation against insolvent defendants who have effected a policy of insurance in respect of liability for a wrong. The parameters of s.62 have not been fully tested before the courts but it is considered to confer on a plaintiff the right, in certain circumstances, to pursue an insolvent defendant’s insurer provided that the liability and quantum of the plaintiff’s claim against the defendant has been ascertained. There has not been much litigation arising from the application of s.62 since 1961, but within the last 12 months there have been two important judgments which suggests that plaintiffs are increasingly looking to insurance companies to make up the deficit left by insolvent defendants.
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About the Author
Martha Wilson
Martha is a partner in the Healthcare team at Hayes solicitors. She works primarily in healthcare litigation, defending personal injuries claims taken against the Health Service Executive as well as against individual medical and dental practitioners.
In addition to contentious matters, Martha also advises on healthcare care related non-claims issues and represents doctors and dentists in relation to complaints to the Medical Council and Dental Council.