The CRU Certificate and its effect on personal injury claims
One of the issues lawyers in serious injury cases must grapple with almost daily is the vexed and at times contentious issue of CRU certificates and the effect they have on personal injury claims.
I recently had an email from a very experienced case manager who deals with many severely injured clients and arranges and supervises their care packages asking what a CRU certificate is and why the client was talking about repayments of benefits when surely their compensation is protected.
It reminded me that many of the issues facing lawyers as part of a compensation claim are simply not known to case managers or rarely encountered. I felt it was therefore of use to those interested to explain the CRU issue and its effect on a civil claim:
Background to CRU
Whilst there are mechanisms to protect a vulnerable client’s compensation in order to protect future entitlement to benefits, an injured client may be obliged to pay back benefits when their claim is settled which have been paid as a result of their accident for up to five years from date of accident.
The long arm of the government extends via the so called CRU department. CRU stands for Compensation Recovery Unit and a CRU Certificate is issued by the Department of Work and Pensions (DWP) to show the amount of recoverable state benefit or lump sum payments which applies to an injury compensation claim.
The government website states that: “The Compensation Recovery Unit (CRU), as part of Department for Work and Pensions (DWP), works with insurance companies, solicitors and any DWP customers, to recover:
- Amounts of social security benefits paid as a result of an accident, injury or disease, if a compensation payment has been made (the Compensation Recovery Scheme)
- Costs incurred by NHS hospitals and Ambulance Trusts for treatment from injuries from road traffic accidents and personal injury claims (Recovery of NHS Charges)”.
The reasoning is that these benefits may have been received as a direct consequence of an accident and so are repayable at the successful conclusion of a compensation claim.
Defendants will register a claim with the DWP once they get notified of it, and this has to be done within 14 days of notification. The CRU amount is generally offset only against the past loss of earnings/care and assistance claims, and this offset is regularly an area of dispute between the parties. If no benefits have been paid, then the certificate will simply state there are no recoverable benefits to pay (a “NIL certificate”, as it is known).
The obligation to pay CRU will come to an end after settlement of the claim and the specified amount by CRU has been paid by the defendant, so future state benefits (as long as financially eligible) are not affected and can still be claimed.
Effects on a civil claim and its settlement
What this means in practice is that the defendant in a case may express an offer as either gross of CRU (ie including it) or net of CRU.
Lawyers need to be very careful about a CRU deduction, as it can be quite a sizeable amount and the client needs to be advised of this potential deduction in a gross settlement and the amount this will constitute.
That may mean a CRU calculation will have to be made to reflect an offer which is accepted sometime after the day on which the offer is made.
It's not unusual to have to review the case and speak to experts or counsel and the client before deciding to accept an offer, and that may well mean the CRU amount increases in the meantime.
As a practical example, if part of your injury claim is your full loss of net earnings worth £30,000 but you have had benefits of £25,000 since the accident to reflect the fact you are not working, when finalising your settlement figure the amount owed to DWP will be deducted from your loss of earnings claim and you will receive the net amount of £5,000.
The logic is that you received the money on account of your lost income and to allow you to keep both would amount to a double recovery. The purpose of compensation is to put you back into the position you would have been in hand the accident not occurred. So recovering twice for lost income would amount to a betterment.
Issues with Universal Credit and CRU
One of the more recent problems with CRU is the introduction and roll-out of Universal Credit, which now replaces the below six individual benefits:
- Housing benefit
- Income-related Employment and Support Allowance
- Income-based Jobseeker’s Allowance
- Child Tax Credit
- Working Tax Credit
- Income Support
I'm not clear whether the new legislation relating to Universal Credit (UC) omitted this on purpose or whether it was a (regrettable) oversight, but the fact is that Universal Credit is a recoverable benefit for the purposes of compensation payments in its entirety (barring, say, any joint applications of spouses which I feel must result in a reduction).
Previously, only Employment and Support Allowance and Jobseeker’s Allowance as well as Income Support were recoverable, but three other benefits integrated into the new UC payment — Housing Benefit, Working Tax Credit and Child Tax Credit — now also become recoverable because UC is a single payment which cannot be broken down into constituent parts for the purposes of recovery by the Compensation Recovery Unit.
Where in the past the six benefits detailed above were listed separately on a CRU Certificate so it was clear which fell to be repaid due to the accident or injury, this is not the case under the new rules relating to UC. Universal Credit is listed only as one payment, even though it is made up of a number of different parts.
I've always felt concerned that, given the intentions behind the introduction of Universal Credit were to unify and simplify the payment of benefits, the DWP CRU department hasn't wanted (or perhaps been unable) to provide a breakdown of UC and its individual parts. In practice, this has led to at least one client being potentially disadvantaged as their partner had made a joint application with the client which included their previously separately claimed Child Tax Credit being incorporated into a joint UC benefits payment.
In the end, through discussion and negotiation we managed to achieve a reduction in CRU being applied by the defendant for the purposes of a gross offer but it was made much more difficult by the legislative position and the DWP not being in a position to break the components of UC down.
Nor will any reduction for contributory negligence reduce the CRU, it is all still payable in full even if, say, a 20% liability deduction to the entire settlement sum is applied.
In my experience an appeal of a CRU certificate is unlikely to lead to the DWP reading through potentially six or more expert reports in order to determine legal causation and attributability of injuries and their consequences (let alone reviewing the effect of a pre-existing injury on causation and attributability). It is possible to apply for a review, but that just adds to the cost of a claim.
All in all, CRU is probably one of the lesser covered topics, but has a real and quantifiable effect on claims made by injured clients or patients. Further details can be found on the government website.
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