Mr. Seamus McCarthy:

The State Claims Agency, SCA, which is part of the National Treasury Management Agency, NTMA, manages legal claims brought against the State and certain designated State bodies. It also has a risk management role, advising and assisting State bodies in minimising their claims exposure. The agency also manages third-party costs borne by the State arising from all categories of litigation, including tribunals of inquiry.

The 2021 financial statements of the State Claims Agency record settlements and associated claim costs totalling €513 million in the year. This expenditure was recovered by the agency from the liable State bodies. The agency’s estimate of the value of claim liabilities outstanding at end 2021 was €4.5 billion. This was more than four times the estimated value of liabilities at the end of 2012. In all, there were 11,408 claims under management at the year end, comprising personal injury claims and third-party property damage claims. Personal injury claims may be further categorised as clinical indemnity cases or general indemnity claims. In addition to the claim costs, the NTMA incurred €29.2 million in administrative costs in the performance of agency services. These administrative costs are charged to the Central Fund of the Exchequer.

In my audit report on the SCA financial statements, I drew attention to a disclosure in the NTMA’s statement on internal control about erroneous payments in 2021 to some of its service providers. Fifteen erroneous payments occurred, with a combined value of €343,000. The payees identified the errors and returned the full value of the payments, so no net financial loss was sustained by the agency. The agency has stated that some of the business processes used in making such payments are manual, and that this was the source of the payment errors. The disclosure notes that the agency has enhanced its controls and procedures to mitigate this business risk.

Chapter 20 of my report on the accounts of public services examined the agency’s management of clinical indemnity claims. At the end of 2021, the estimated outstanding liability for such claims was €3.4 billion, or 75% of the total outstanding liability. The estimated average liability in clinical indemnity cases is heavily influenced by a small number of high-value claims involving cases of catastrophic injury. Cerebral palsy claims, which predominantly occur within maternity services, accounted for approximately 40% of the estimated liability at end 2021, but represented just 4.5% of the total number of active claims. State bodies within the agency’s scope are legally required to report identified incidents that could lead to a claim, using an online system called the national incident management system, NIMS. The agency has stated there is evidence that high levels of incident reporting and a culture of learning are associated with lower levels of litigation. However, the agency’s analysis has identified a number of hospitals that have a poor incident reporting record. I recommended a programme of measures be adopted to bring their reporting of incidents to an acceptable level.

The agency disseminates comprehensive advice and provides assistance to State bodies on the management of litigation risks, and the enhancement of the safety of service users or patients to minimise the incidence of claims and the liabilities of the State. While the agency’s legislative remit allows it to evaluate the adequacy of the measures adopted by State bodies to address identified risks, it does not routinely carry out such evaluations.

The HSE reimburses the State Claims Agency for claim settlements and associated costs on behalf of its own hospitals and section 38 hospitals. It also reimburses the agency in respect of Tusla claims. The reimbursement is reported as a charge in the HSE’s annual financial statements, which also include a contingent liability note in respect of the estimated value of outstanding claims. Individual health bodies covered by the clinical indemnity scheme are not required to disclose details of any settled or outstanding claims related to their activities in their own annual financial statements, or even to acknowledge the occurrence of serious adverse events in their financial reporting.