Compensation recovery scheme – recoupment

Compensation recovery scheme

State recovery of benefits paid after accident or injury – recoupment of benefits

The State can recover benefits paid after accident or injury if the person injured brings a successful claim for compensation. Recovery is only possible if the compensation case is successful, as the Government cannot bring a separate action.

The benefits are recovered from the “compensator” which means the insurance company or Defendant who has to pay compensation. Let us explain how this works.

Some or all of the benefits received are deducted from the compensation of the Claimant and repaid to the Government. Don’t worry as a Claimant is not being penalised. As an example you bring a case following a workplace accident. You have lost eight weeks work at £200 per week. You have received £60 each week in benefits, so your actual loss each week is £140. You claim £140 each week from the Defendant. Your case for compensation is successful so you receive £140 per week as part of your settlement and in addition the Defendant’s insurer pays back the £60 you received each week to the Government. So look at the payment of benefits as money on account of your compensation, and you will see you have no need to feel aggrieved.

Added protection for the Claimant means no credit for benefits is given against compensation for the injury, only specific items of financial loss on a like for like basis. This is a complicated subject called offsetting, and recoverable benefits are set out on the Government’s website as follows.

Compensation in respect of loss of earnings during the relevant period may be reduced where the following benefits have been paid to meet the same need:

Disablement Pension payable under section 103 of the 1992 Act (also known as Industrial Injuries Disablement Benefit)
Employment and Support Allowance
Incapacity Benefit
Income Support
Invalidity Pension
Invalidity Allowance
Jobseeker’s Allowance
Reduced Earnings Allowance
Severe Disablement Allowance
Sickness Benefit
Statutory Sick Pay paid before 6 April 1994
Unemployability Supplement
Unemployment Benefit
Universal Credit

Compensation in respect of cost of care may be reduced where the following benefits have been paid during the relevant period:

Attendance Allowance
Care Component of Disability Living Allowance (DLA Care)
Disablement Pension increase for Constant Attendance Allowance
Exceptionally Severe Disablement Allowance
Living Component of Personal Independence Payment (PIP L)
Nursing care and attendance (including holiday/respite care) and the inability to cook may fall within Schedule 2.

Compensation in respect of loss of mobility may be reduced where the following benefits have been paid during the relevant period:

Mobility Allowance
Mobility Component of Disability Living Allowance (DLA Mobility)
Mobility Component of Personal Independence Payment (PIP M)
Travel to hospital for treatment and additional costs of travel that may fall within Schedule 2 include:

– vehicle costs
-powered wheelchair costs
-costs of adaptations to transport
-taxi and bus fares (where paid as a result of accident, injury or disease)
-increased cost of a car
-additional costs incurred for holiday travel

Payment into court forms (now called Part 36) require the compensator to list the benefits which have been offset against the above heads of compensation.

The information above was taken from a Government website and to see in full the main principles of the Scheme I suggest you follow the link.

The recovery of State benefits, or recoupment as it is known, can be complicated. An experienced personal injury compensation solicitor will understand your financial position and have helped with the State benefits you have received. The recoupment of these benefits should be explained to you when your compensation case is valued, and before any offer to settle is made. If you continue to receive benefits or want to preserve your ability to claim such benefits or obtain financial support for care you should seriously consider a personal injury trust to protect your entitlements.

There is nothing wrong with the Government following the principle that the wrongdoer should pay, but if a compensation claim has to be made for the Government to recoup its benefits payment it should thank the Claimants, not criticise them.

Call for help without obligation on 01392 314086

About Mark Thompson

Personal injury and accident specialist solicitor

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6 Responses to Compensation recovery scheme – recoupment

  1. Jon says:

    Hi
    My claim has just been valued at 12000 to 16000. It is being put to the other party on Monday I belive.
    I was claiming esa before the accident but I have made a claim for pip since which I am now in receipt of. I haven’t received this as a direct influence of the accident although it has played a small role on one or the descriptors.
    I am unsure what will happen in regards to my compensation now.
    Also with the compensation I was planning on taking my family on a holiday, could I do this via a trust fund? Could I pay money to a relative via cheque from the trust fund
    Thanks in advance

    • Mark Thompson says:

      The first question relates to recoupment of benefits. The party paying compensation, usually the defendant’s insurer, is liable to repay to the government all benefits you received as a result of the accident. That is a separate liability and the insurer can squabble about the amount with the recoupment unit of the DWP.
      Within the calculation of your compensation claim, you only have to deduct certain benefits against certain elements of your claim. The page above lists the benefits and the elements of your claim.
      If personal injury compensation is held in trust, the trustees will be able to make payments which are to your benefit, so a holiday is fine. Please be aware that not every trust is the same, so the actual powers of trustees do depend on the powers they are given in the trust document.

  2. David says:

    Hi mark do you have to pay all your benifits back when your claim is finished including dla

    • Mark Thompson says:

      The party liable to repay benefits is not you, it is the compensator – that is the person or organisation which is paying you compensation.
      The party paying compensation may deduct certain benefits from certain parts of your compensation.
      You ask about DLA, disability living allowance, so I will explain that. The compensator will deduct the care component of your DLA from the part of your case which claims for the cost of care. The mobility element of DLA will be deducted from that part of your compensation which deals with your loss of mobility. So, if you receive DLA, care and mobility components, but do not seek compensation for the cost of care or loss of mobility, there should be no deduction from your compensation.
      There is a detailed explanation on the Government website at point 4.2
      Youu can make sense of this by treating benefits as a payment on account of compensation. In simple terms, if you lost £100 per week in earnings, but received £40 per week in benefits, your loss is actually £60 per week. You give credit for the £40 benefits and claim £60 per week and the insurance company which is paying compensation pays £40 per week back to the government. You recover your actual loss and the government gets its benefit payment back, as why should the government pay for a loss which is the fault of someone else?

  3. Peter says:

    I had an accident at work in July 2010 and my injury claim went on till November 2013 where I won my case I won £28,000 but the government took £13,000 back off me because I was on the sick receiving sick benefits is it right they can take so much and have I left it to late to find out

    • Mark Thompson says:

      I presume your question relates to what are called the recoupment regulations.

      If you receive benefits as a result of an accident the insurer which pays you compensation must repay those benefits to the Government through the Department of Work and Pensions.

      Quite separately you must give credit for certain benefits you have received if those benefits coincide with certain parts of your compensation. A simple example is that if you received the mobility element of disability allowance you only have to give credit for that benefit against claimed loses in respect of mobility. The same would go for the care element of disability allowance as you would only give credit against the cost of care which you claimed in the compensation.

      Your solicitor should have explained this to you when advising on the settlement of your case.

      The Government website is helpful if you read section 8.

      I think the best way to put your mind at rest is to ask your solicitor to explain for which benefits you gave credit and against which parts of your claim. The most likely explanation is that wage loss made up the greater part of your claim and you had to give credit for income support or ESA.

      I hope that helps point you in the right direction.

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