In most cases where a person receives lump sum damages for personal injury, it is assumed that the money will be enough to put them back in the position they would have been if the injury had not occurred (indeed, that is the aim of the law of compensation). However, in many cases people run out of compensation earlier than expected. Where such people seek social security, they are often thought to be ‘double dipping’, having misspent their damages, and they may be denied payment. There is little empirical data on what has happened when people run out of their lump sum damages, including on the extent to which they have recklessly misspent, on what factors have contributed to the dissipation of the funds and on whether these are factors personal to the claimant or are indeed institutional or legal system factors. Drawing on data derived from cases where the Welfare Rights Centre of New South Wales acted for people subject to a social security ‘lump sum preclusion period’, this article maps out the approaches of tort law and social security law to lump sum damages. The article seeks to establish a picture of the circumstances associated with a person finding themselves in this situation and concludes with some suggestions about how to reduce its occurrence.
Prue Vines, Matthew Butt and Genevieve Grant, When Lump Sum Compensation Runs Out: Personal Responsibility or Legal System Failure?, Sydney Law Review – Volume 39, Number 3, September 2017.