Madden, Bill --- "Compensation and the National Disability Insurance Scheme" [2014] PrecedentAULA 58; (2014) 125 Precedent 15

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COMPENSATION AND THE NATIONAL DISABILITY INSURANCE SCHEME

By Bill Madden

On starting to write our book^[1] about the National Disability Insurance Scheme (NDIS) last year, it became apparent that not all aspects of the Scheme’s operation were clear. Expanding on the provisions in the National Disability Insurance Scheme Act 2013 (Cth) (the Act) and the related Rules, the National Disability Insurance Authority (NDIA) has since published a series of operational guidelines, available on the NDIS website. The best starting point is the Overview guideline dated 9 December 2013.^[2]

This article briefly describes the importance of the interplay between compensation and the NDIS for lawyers as, increasingly, personal injury compensation recipients who suffer serious injury will need to consider receipt of benefits under the NDIS upon finalisation of their claims, whether by judgment or compromise.

The core message is simple enough: receipt of compensation (or even abandonment of a right to compensation) may give rise to a repayment obligation and may result in the reduction of the reasonable and necessary supports stated in a participant’s NDIS plan to take account of the compensation payments received, or given up, by a person.

NDIS benefits

For those living in the launch/trial sites who meet the s21 criteria regarding age, residence and disability, NDIS benefits will already be available. The most recent published NDIA report (published August 2014) suggests that 8,585 people had been found eligible for the NDIS, with 7,316 having approved individualised support plans in place by the end of June 2014.^[3]

In 2013, the launch/trial sites were:

• The Hunter area of New South Wales;

• The Barwon area of Victoria;

• South Australia, but only for persons aged up to age 14; and

• Tasmania, but only for persons aged 15 to 24 years.

From 1 July 2014, the trial sites were extended to include:

• people up to age 65 in the Australian Capital Territory;

• the Barkly region of the Northern Territory;

• the Perth Hills area of Western Australia; and

• the Lake Macquarie area of New South Wales.

Some Administrative Appeals Tribunal decisions have started to flow through, providing assistance in understanding the likely boundaries of the scheme. For example, Mulligan v National Disability Insurance Agency [2014] AATA 374 confirmed a refusal by the NDIA to fund lawn-mowing services, requiring consideration of whether the inability to mow lawns for health reasons constituted a substantially reduced functional capacity as required by the Act. Young v National Disability Insurance Agency [2014] AATA 401 confirmed the NDIA’s refusal to fund a portable oxygen concentrator and an insulin pump, given that similar supports were funded through the health system.

To date, there have been no reported decisions addressing the relationship between compensation payments and the NDIS.

THE LEGISLATION

Certain sections of the Act are of particular relevance to the interplay between compensation and the NDIS. Section 11(1) and (2), which define compensation, provides the starting point.

‘11 (1) In this Act “compensation” means a payment (with or without admission of liability) in respect of:

(a) compensation or damages in respect of personal injury; or

(b) personal injury, under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c) personal injury in settlement of a claim for damages or a claim under such an insurance scheme;

that is wholly or partly in respect of the cost of supports that may be provided to a participant (whether or not specifically identified as such). It does not matter whether the payment is made directly to the person who sustained the personal injury or to another person in respect of that person.

(2) A payment referred to in subsection (1) may be:

(a) in the form of a lump sum or in the form of a series of periodic payments; and

(b) made within or outside Australia.’

Sections 106 and 107 of the Act provide that the NDIA may recover compensation fixed after NDIS amounts (benefits) have been paid. Section 106 deals with court judgments and s107 deals with consent judgments/settlements.

Following judgments, the precise wording of s106 will require attention for individual matters. Broadly speaking, where NDIS amounts have been paid for the provision of supports in respect of an impairment and the judgment is in relation to an injury that caused the impairment, the NDIS amounts paid will be recoverable by the NDIA.

APPORTIONMENTS AND OTHER REDUCTIONS

Sections 106 and 107 of the Act both provide that recovery may be for a lesser sum if the judgment provides for an apportionment. Contributory negligence deductions are expressly addressed in the Overview guideline^[4] at [20], where it is stated that the NDIS compensation reduction amount is to be reduced by the same proportion as applied in reducing the size of the award. Claimants would therefore be wise to ensure that any contributory negligence reduction is expressly stated in a consent judgment or deed of release.

Another matter of importance is the identification of deductions from the compensation, identified in the Overview to include the repayments to the Department of Human Services (Centrelink) and Department of Health (Medicare). The Overview guideline states at [21]:

‘Recognition that the participant does not receive or retain these amounts as part of his or her compensation means that the amounts are deducted from the compensation amount taken into account by the NDIA in assessing the compensation reduction amount. This results in a lower compensation reduction amount, and more generous supports from the NDIA than if these amounts were not deducted from the compensation award.’

NOTICES TO INSURERS

In a fashion similar to that presently applying for other recoveries such as Medicare and Centrelink, the Act provides for notices to be sent to insurers, once a claim has been made, with a view to direct payment by an insurer once the claim resolves: ss109-115.

Unsurprisingly, if compensation has not been received by the claimant as yet, then recovery by the NDIA cannot immediately occur. The relevant operational guideline^[5] addresses the anticipatory issue of a preliminary notice or a recovery notice. The former is a written notice to another person or an insurer that the delegate may wish to recover an amount from the person or insurer, whereas the latter is a written notice to another person or an insurer that the delegate proposes to recover an amount from the person or insurer. A preliminary notice will usually but not always be issued before a recovery notice.

A DEBT BUT WITH DISCRETION

An amount payable by a person under ss106 or 107 becomes a debt due by the person to the NDIA, by virtue of s108.

It may be important in some cases to note that there is a discretion available under s116, which provides that the CEO of the NDIA may treat the whole or part of a compensation payment as not having been fixed by a judgment (including a consent judgment) or settlement, if the CEO thinks it is appropriate to do so in the special circumstances of the case.

Issues such as financial hardship may warrant consideration for the purpose of s116.

NDIS SUPPORTS AFTER RECEIPT OF COMPENSATION

What is the position of a person who has received compensation, but wishes to continue receiving supports? Or to a person who received compensation some time ago and now applies to the NDIS for the funding of supports?

Clause 10 of the Overview guideline states that the NDIS is designed to complement, not replace, existing compensation arrangements for personal injury. Clause 11b makes clear that the NDIA will ensure that the reasonable and necessary supports stated in a participant’s plan are reduced to take account of the compensation payments received, or given up, by a person. Specific guidelines are identified in clause 12 of the Overview Guideline, two of which are addressed below. The first relates to receipt of compensation, the second to an agreement to give up a right to compensation.

GUIDELINE: COMPENSATION RECEIVED UNDER A JUDGMENT OR SETTLEMENT

The Compensation received under a judgment or settlement operational guideline^[6] begins by noting at [7] that compensation may be received following a judgment, a consent judgment or a settlement.

It may be important to note that the compensation is said to flow from a personal injury that has caused ‘to any extent’ the impairment. However, the language in this guideline (at [7]) appears to differ from that found in s11 of the Act, which refers to compensation ‘that is wholly or partly in respect of the cost of supports that may be provided to a participant (whether or not specifically identified as such)’. In practice, the difference may be of limited relevance, but there may be occasions on which the compensation is for some injury that has caused, to any extent, an impairment, but which is not wholly or partly in respect of the cost of supports provided to a participant.

This guideline asserts at [12] that the recovery of past NDIS payments is not discretionary. That appears to be consistent with s106(2) and s107(2) of the Act. However, the assertion appears to overlook the CEO’s power under s116 to disregard certain payments, as referred to above.

GUIDELINE: REVISING PLANS AND REDUCING SUPPORTS AFTER AN AGREEMENT TO GIVE UP COMPENSATION

Perhaps an unusual circumstance, but one that is potentially relevant for current participants and those people who later become participants (paragraph [8]), the Revising plans and reducing supports after an agreement to give up compensation operational guideline^[7] is said to apply when such a person has an impairment caused to any extent by a personal injury and has entered into an agreement to give up a right to compensation in respect of that injury: (paragraph [7]).

Table 1 makes it reasonably clear that if there was an agreement to give up a right to compensation, there must be ‘information to establish, as a matter of fact, that there were amounts the participant did not receive by way of compensation because of the agreement’. (Criterion 3).

Criterion 4 expands on this and warrants reading in full:

‘It was not reasonable, in the circumstances, for the participant to have entered into the agreement, taking into account:

1. The disability of the participant, including whether it affected their ability to reasonably assess the terms of the agreement;

2. The circumstances which gave rise to the entitlement or possible entitlement to compensation;

3. Any reasons given by the participant as to why they entered into the agreement;

4. The impact (including the financial impact) on the participant and their family that would have occurred if the claim for compensation had been pursued or continued; and

5. Any other matter considered relevant, having regard to the objects and principles set out in Part 2 of Chapter 1 of the NDIS Act.’

The existence of a document signed by a participant, such as a deed of release, may well constitute evidence that there was an agreement to give up a right to compensation. However, establishing that there were amounts the participant did not receive by way of compensation because of the agreement may require legal advice, to the effect that the participant had at least reasonable prospects of receiving some additional amount as compensation.

The factors listed above, which might be called justifying factors for such an agreement, seem self-explanatory and quite reasonable.

CONCLUSION

While there have been no reported decisions addressing the relationship between compensation payments and the NDIS, lawyers practising in the personal injury compensation area should now consider the NDIS when advising clients.

On advising clients as to the potential pursuit of a compensation claim, thought should be given to the potential loss of future NDIS funding for reasonable and necessary supports.

On settlement, obligations to repay the NDIA should be borne in mind when advising on potential net outcomes from judgments or settlements. As noted above, that may even be the case if there is a proposed abandonment of a claim, documented – for example – as a judgment in favour of a defendant with each party to bear its own costs.

Particular caution may be warranted in providing advice to parents pursuing wrongful birth claims in respect of disabled children, noting that s11 includes words when defining compensation such that it does not matter whether the payment is made directly to the person who sustained the personal injury or to another person in respect of that person. Having said that, s11 does refer specifically to personal injury,^[8] which may not be apt for wrongful birth claims by parents.

Bill Madden is National Practice Group Leader, Medical Law, Slater & Gordon, and Adjunct Fellow, School of Law, University of Western Sydney. EMAIL [e-mail].

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^[1] Madden, McIlwraith & Brell, The National Disability Insurance Scheme Handbook, Lexis Nexis 2014.

^[2] http://www.ndis.gov.au/sites/default/files/documents/og_compensation_overview.pdf.

^[3] http://www.ndis.gov.au/sites/default/files/documents/report_on_the_sustainability_of_scheme_q4_2014.pdf.

^[4] http://www.ndis.gov.au/sites/default/files/documents/og_compensation_overview.pdf.

^[5] ‘Operational Guideline – Compensation – Recovery of NDIS Amounts – Compensation not Received but Action Commenced’, 9 December 2013, accessed at http://www.ndis.gov.au/sites/default/files/documents/og_compensation_not_received.pdf.

^[6] ‘Operational Guideline – Compensation – Recovery of NDIS Amounts – Compensation Received by A Participant from a Judgment or Settlement’, 9 December 2013, accessed at http://www.ndis.gov.au/sites/default/files/documents/og_compensation_received_judgement.pdf.

^[7] ‘Operational Guideline – Compensation – Revise the Plan and Reduce the Supports – Agreement to Give Up Compensation, 9 December 2013, accessed at http://www.ndis.gov.au/sites/default/files/documents/og%20_compensation_agreement_give_up.pdf.

^[8] Personal injury is not defined in s9 or s11 of the Act.