Briggs, Brian --- "The military compensation scheme: Unique, complex and constantly changing" [2019] PrecedentAULA 30; (2019) 152 Precedent 10

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THE MILITARY COMPENSATION SCHEME

UNIQUE, COMPLEX AND CONSTANTLY CHANGING

By Brian Briggs

When describing the veterans’ compensation and rehabilitation system, one must first consider its history and realise that while many compensation payments are similar to mainstream workers’ compensation schemes, the nature of military service as a unique occupation has led to a scheme that has evolved over a hundred years and cannot easily be identified or understood by the lay observer.

The current system can be traced as far back as 1914 when the War Pensions Act was introduced. The vision was to re-integrate returned soldiers without war injuries into society. A Repatriation Department was created and benefits were provided to assist veterans to find employment, and provide sustenance payments until this occurred, including rental assistance and business loans.

Following World War One, amendments were made to the existing legislation and further Acts introduced. So began a process that has continued to this day. Even now, several enquiries are on foot into the military rehabilitation and compensation schemes in Australia. While it is possible to describe the current scheme, there are rumblings that further change is being contemplated, including abolishing the Department of Veterans’ Affairs (DVA) and moving to two schemes, depending on when service was rendered.

In a nutshell, the current system is complex and difficult to navigate. There are multiple relevant pieces of legislation and the process of making claims for veterans is confusing, at times extremely slow and process-orientated. While steps are being taken to improve the system, it is a minefield that has already been laid down with the potential for booby traps for anyone straying from a safe and well-trodden path. It seems that every few months more legislation is enacted, some beneficial and some that strip away the rights of our veterans. In recent years, inquiries and legislation into veterans’ affairs include:

REVIEWS AND SENATE INQUIRIES

• Military Compensation Act Review 2009;

• DVA Review of DVA-Funded Ex-Service Organisation (ESO) Advocacy and Welfare Services Report 2010;

• Review of Military Compensation Arrangements 2011 – Senate Inquiry;

• Senate Inquiry into Processes to Support Victims of Abuse in Defence 2014;

• Senate Inquiry into Mental Health of Australian Defence Force Personnel 2015;

• Senate Inquiry into Suicide by Veterans and Ex-Service Personnel 2016 (led to the report, Suicide Enquiry, The Constant Battle: Suicide by Veterans);

• Department of Veterans Affairs Legislation Workshop – October 2017;

• Productivity Commission Inquiry into Compensation and Rehabilitation of Veterans – 2018; and

• DVA Veterans Advocacy and Supporting Services Scoping Study – 2018.

BILLS, ACTS AND LEGISLATION

• Veterans’ Affairs Legislation Amendment (Military Compensation Review and Other Measures) Bill 2013;

• Veterans’ Affairs Legislation Amendment (2015 Budget Measures) Bill 2015;

• Veterans’ Affairs Legislation Amendment (Digital Readiness and Other Measures) Bill 2016;

• Safety, Rehabilitation and Compensation Legislation Amendment (Defence Force) Bill 2016 – now Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA);

• Veterans’ Affairs Legislation Amendment (Omnibus) Bill 2017;

• Defence Legislation Amendment (2017 Measures No. 1) Bill 2017;

• Veterans’ Affairs Legislation Amendment (Veteran-centric Reforms – No. 1) Act 2018;

• Veterans’ Affairs, Defence and Trade Legislation Amendment (Veteran-centric Reforms No. 2) Bill 2018; and more recently

• The Australian Veteran’s Recognition (Putting Veterans and their Families First) Bill 2019.

To add confusion to the system, readers will be aware of the revolving door of Ministers at the DVA. The Department is in a period of significant change and although the overall number of its clients is falling, recent conflicts in East Timor, Iraq and Afghanistan have meant that a whole new cohort of younger clients are entering the system. The younger veterans have completely different needs and expectations to those veterans who may have served during the Vietnam War or earlier conflicts.

THE CURRENT LEGISLATIVE FRAMEWORK

The current compensation scheme comprises three main Acts:

• The Veterans’ Entitlements Act 1986 (VEA);

• The Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA), enacted in 2017, which replaced the Safety, Rehabilitation and Compensation Act 1988 (SRCA), which covers civilian workers such as Commonwealth employees; and

• The Military Rehabilitation and Compensation Act 2004 (MRCA).

1. Repatriation Scheme

The Veterans’ Entitlements Act 1986 (VEA) provides treatment, benefits, allowances and pensions in respect of war-caused or defence-caused injury, disease or death related to operational, peace-keeping and hazardous service up to 30 June 2004 and peacetime service from 7 December 1972 to 6 April 1994 (after completion of a three-year qualifying period, unless medically discharged); or from 22 May 1986 to 30 June 2004 (if enlisted after 22 May 1986 and served continuously until after 6 April 1994).

The VEA provides for a means-tested service pension for certain eligible veterans and their partners and also an income support system paid to eligible war widows and widowers. Compensation for veterans and their dependants is provided by a disability pension, war widow’s and widower’s pension and orphan’s pension.

2. Military Compensation Scheme

The Safety, Rehabilitation and Compensation (Defence-related claims) Act 1988 (DRCA) provides treatment, benefits and compensation in respect of injury, disease or death related to the following service (noting that the VEA may also apply), up to 30 June 2004:

• peacetime service (from 3 January 1949);

• peacekeeping service (from 7 December 1972);

• hazardous service (from 22 May 1986); and

• operational service (from 7 April 1994).

Additional compensation may also be paid under the Defence Act 1903 for severe injury or compensable death.

3. Military Rehabilitation and Compensation Scheme

The Military Rehabilitation and Compensation Act 2004 (MRCA) provides treatment, benefits, allowances and compensation for injury, disease or death related to all defence service rendered on or after 1 July 2004; that is, all warlike service, non-warlike service and peacetime service.

The VEA and the SRCA (now DRCA) were not repealed as a consequence of the passage of the MRCA. It is therefore possible for veterans/members of the military with service prior to 1 July 2004 to be covered by two or all three of the above schemes, in addition to one or more of the government’s ex gratia schemes. However, a veteran or dependant who would be entitled to a benefit under the VEA or the DRCA and a similar benefit under the MRCA is generally entitled to receive that benefit only under the MRCA.

If you are confused, be warned that the picture becomes even more complicated, so imagine how veterans feel when having to navigate this system.

As noted by the Draft Report of the Productivity Commission and confirmed by the defence community, the compensation package is complex. Coupled with this are offsetting provisions which apply between the three main pieces of legislation, and the operation of a system of superannuation, invalidity payments and life insurance which operate alongside the compensation system. The Productivity Commission has recommended that by 2025 the Australian government should create two schemes for veteran support, based on the current VEA with some modifications, and a modified MRCA that incorporates the DRCA.

The MRCA is a no-fault compensation scheme that applies to all defence service rendered on or after 1 July 2004. It is not necessary to prove that the Commonwealth, another member or a third party was at fault in order to receive compensation. Claims are administered by the Military Rehabilitation and Compensation Commission (MRCC), which is an independent commission that receives administrative support from the DVA.

Members whose injury or disease is related to warlike service or non-warlike service may receive higher permanent impairment payments than those injured during peacetime service. However, members who are eligible for maximum permanent impairment compensation receive the same amount, regardless of the type of service.

Different standards of proof apply to claims for acceptance of liability for injury, disease and death for different types of service:

• Warlike service and non-warlike service – the MRCC must be satisfied beyond reasonable doubt that the claimed injury, disease or death is NOT related to a member’s defence service before it can deny liability; and

• Peacetime service – the MRCC must be reasonably satisfied that the claimed injury, disease or death was, more likely than not, related to a member’s defence service before it can accept liability.

While all defence service rendered after 30 June 2004 is covered by the MRCA, some members remain eligible to claim a service pension under the VEA after that date (subject to income and assets tests). A member who suffers an aggravation of, or a material contribution to, a war-caused or defence-caused injury or disease (within the meaning of the VEA) related to defence service after 30 June 2004, may in some circumstances make a claim for an increase in their rate of disability pension under the VEA in respect of the aggravated injury or disease rather than pursue a claim under the MRCA.

SERVICE INJURIES AND SERVICE DISEASES

For the purposes of the MRCA, an injury sustained, or a disease contracted, by a veteran is a service injury or disease if one or more of the following apply:

• the injury or disease resulted from an occurrence that happened while the person was a veteran rendering defence service;

• the injury or disease arose out of, or was attributable to any defence service rendered by the person while a veteran;

• the injury was sustained due to an accident that would not have occurred or the disease would not have been contracted but for the person having rendered defence service while a veteran;

• the injury was sustained due to an accident that would not have occurred or the disease would not have been contracted but for changes in the person’s environment consequent upon their having rendered defence service while a veteran;

• the injury or disease was sustained or contracted while the person was a veteran rendering defence service, but did not arise out of that service, and the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person while a veteran after they sustained the injury or contracted the disease;

• the injury or disease was sustained or contracted before the commencement of a period of defence service rendered by the person while a veteran, but not while the person was rendering defence service and the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person while a veteran after they sustained the injury or contracted the disease; or

• the injury or disease resulted from an accident that occurred while the person was travelling, while a veteran rendering peacetime service but otherwise than in the course of duty, on a journey to a place for the purpose of performing duty or away from a place of duty upon having ceased to perform duty.

A ‘VETERAN’

Recent changes to how defence personnel are identified have moved away from the reference to a ‘member’ being a current or former member of the Australian Defence Force (ADF) (Permanent or Reserves), a cadet, an officer or instructor of cadets or a person declared by the minister, to the term ‘veteran’.

There has been some angst in the defence community about this change in definition, as previously the term ‘veteran’ described former ADF members who served or fought outside Australia against hostile forces or served during the World Wars. In 2017 it was agreed by the Australian state and territory ministers responsible for veterans issues to define a ‘veteran’ as anyone who is, or has in the past, served in the ADF. This definition captures all current and past members of the ADF whether or not they were deployed abroad and regardless of the nature of their service.^[1]

As an advocate lawyer working in this area it would be far easier if the treatment of claims was as easy as changing the reference to defence personnel as veterans. To complicate matters, different tests are used when it comes to determining liability for injuries and diseases, depending on whether a veteran has suffered same in warlike service and non-warlike service as opposed to injuries suffered in peacetime service. This discrepancy has caused much concern over recent years and the Productivity Commission Draft Report addresses this in some detail. I would recommend reading the Report released in December 2018. Unfortunately, condensing some 650 pages of findings and recommendations is beyond the scope of this article.

LIABILITY

When dealing with liability under the VEA and MRCA a claimant must address the Repatriation Medical Authority (RMA) Statements of Principles (SOPs) which list factors that are interpreted strictly in order to have liability accepted for injuries, diseases or conditions connected to military service. Many advocates have been calling for years for the SOPs to be treated as a guide only, but unfortunately our calls continue to fall on deaf ears.

The SOPs are legislative instruments that have complicated wording and are difficult to understand. They have been the subject of much litigation and frustration in recent years. If only one of the SOP factors is not met, a claim will fail.

If a claim for acceptance of liability relates to warlike service or non-warlike service rendered by a person while a veteran, the MRCC must determine that the claimed condition is a service injury or service disease unless it is satisfied, beyond reasonable doubt, that there are no sufficient grounds for making that determination. Simplified, the term ‘sufficient grounds’ is viewed by reference to the reasonable hypothesis contained in the applicable SOP.

Simply put, the MRCC must show there is no causal connection between the injury and service to disallow the claim.

In contrast, if a claim for acceptance of liability relates to peacetime service rendered by a veteran, the MRCC will decide the matter to its reasonable satisfaction by reference to the SOPs on the balance of probabilities, which essentially places onus on the veteran to establish a causal connection to the service.

TREATMENT PAID FOR OR PROVIDED BY THE COMMONWEALTH

If a veteran received treatment that was paid for or provided wholly or partly by the Commonwealth for an earlier service injury or disease and as a consequence of the treatment the person sustained the claimed condition, that condition is taken to be a service injury or disease. If the claimed condition was aggravated by the treatment, the claimed condition (and not just the relevant sign or symptom) is also taken to be a service injury.

Unintended consequences of the treatment can also, in certain circumstances, be found to be service injuries. The notion of signs and symptoms is another area where many pages could be spent explaining how the DVA treats same.

SERVICE DEATH

As would be expected, the scheme also covers the death of veterans. For the purposes of the MRCA, the death of a veteran is a service death if one or more of the following apply:

• the death resulted from an occurrence that happened while the person was a veteran rendering defence service;

• the death arose out of, or was attributable to, any defence service rendered by the person while a veteran;

• the death was due to an accident that would not have occurred or a disease that would not have been contracted but for the person having rendered defence service while a veteran;

• the death was due to an accident that would not have occurred or a disease that would not have been contracted but for changes in the person’s environment consequent upon them having rendered defence service while a veteran;

• the injury or disease from which the person died was sustained or contracted while they were a veteran rendering defence service, but did not arise out of that service and the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person while a veteran after they sustained the injury or contracted the disease;

• the injury or disease from which the person died was sustained or contracted before the commencement of a period of defence service rendered by the person while a veteran, but not while the person was rendering defence service and the injury or disease was contributed to in a material degree by, or was aggravated by, any defence service rendered by the person which a veteran after they sustained the injury or contracted the disease;

• the death resulted from an accident that occurred while the person was travelling, while a veteran rendering peacetime service but otherwise than in the course of duty, on a journey to a place for the purpose of performing duty or away from a place of duty upon having ceased to perform duty; or

• the injury or disease from which the person died was a previously accepted and continuing service injury or service disease.

When determining a death claim under the MRCA, regard must again be had to whether the veteran was rendering warlike, non-warlike or peacetime service together with the SOPs addressing reasonable hypothesis or on the balance of probabilities.

EXCLUSIONARY PROVISIONS

Even if the claimed injury, disease or death is service-related, the MRCC might be prevented from accepting liability because of an exclusionary provision relating to the following:

• serious defaults, wilful acts and the like;

• reasonable counselling about a person’s performance as a veteran;

• false representations;

• travel during peacetime service; and

• the use of tobacco products after a certain date.

ACCEPTED CONDITIONS

Once a veteran has an injury or disease accepted by the MRCC, they may be entitled to claim for certain benefits including:

• reasonable medical expenses;

• rehabilitation programs;

• retraining;

• incapacity payments (compensation for economic loss); and

• personal impairment (compensation for non-economic loss).

I would refer the reader to the Military Rehabilitation and Compensation Booklet which is publicly available from the MRCC and DVA and provides a comparison of benefits under the MRCA with those provided under the VEA and DRCA. The booklet also includes information on the following benefits and schemes not covered by this advice:

• aids and appliances;

• household and attendant care services;

• alterations to place of work, education and residence;

• MRCA supplement (pharmaceutical and telephone allowances);

• MRCA Education and Training Scheme;

• Motor Vehicle Compensation Scheme;

• Veterans and Veterans Families Counselling Service;

• Veterans Vocational Rehabilitation Scheme;

• Defence Home Ownership Assistance Scheme;

• Defence Homeowners Scheme; and

• Defence Services Homes Scheme.

With an acceptance of liability, a veteran will have access to rehabilitation following assessment and programs including medical, dental, psychiatric and hospital services (whether on an in-patient or out-patient basis), physical training and exercise physiotherapy, occupational therapy, counselling, psychosocial training and vocational assessment.

Medical expenses can be paid through reimbursement by the Commonwealth of reasonable costs or provision of a Repatriation Health Card (White and Gold Cards) and a MRCA Supplement. In the past year, the DVA has also introduced the non-liability Health Care Card to allow veterans access to unlimited psychiatric treatment even if liability has not been accepted for the condition. This step has been an extremely positive move and I believe it is one of the reasons behind a decline in the suicide rate for veterans suffering from mental health issues. A separate paper could be written on the complexities and requirements of the White and Gold Cards. Similarly, I do not intend to address in great detail the requirements for incapacity payments and allowances for the Special Rate Disability Pension or how compensation for death is determined.

LUMP SUM COMPENSATION FOR PERMANENT IMPAIRMENT

If a service injury or disease has resulted in permanent impairment, the veteran may be entitled to compensation which is an alternative to common law damages. It is payable for impairment and related lifestyle effects by reference to the Guide to Determining Impairment and Compensation (GARP). Prior payments of disability pension under the VEA or permanent impairment compensation under the DRCA will be deducted from the award for compensation under the MRCA and DRCA.

OFFSETTING AND REPAYMENTS

For a practitioner dealing with veterans’ claims, regard must also be had to the impact of Centrelink, Medicare, private health funds, and superannuation payments. Pensions and allowances under the VEA also need to be considered.

Space limitations prevent me from addressing common law damages, Commonwealth and third party negligence, notice requirements and limitation periods; however, please contact me should you wish to discuss same. I am also unable to address the reconsideration, review and appeals process here, including the now single pathway to the Veterans Review Board for MRCA claims.

CONCLUSION

In this article I have attempted to provide fellow practitioners with a basic understanding of the statutory military compensation schemes. I would suggest perusing information from the Department of Veterans’ Affairs website and the Productivity Commission report (to be finalised). The Commission has also begun to publish transcripts from the recent hearings, which should be considered. Even now, further DVA reforms are underway which may result in changes to the structured arrangements, the schemes for veteran support and compensation, claims and reviews and prevention rehabilitation, wellness, transition and healthcare for our service personnel.

While there is a proposal by the Productivity Commission to abolish the DVA, I and many other advocates do not support this recommendation. The DVA has problems but positive steps and improvements have occurred in recent months and I cannot see the benefit of throwing out the baby with the bathwater. I have been party to recent productive, open, robust and transparent communications with the DVA, which in the past was non-existent with claimants’ lawyers.

I agree that the Productivity Commission’s recommendation to move to two schemes is a step in the right direction, as it is crucial to resolve the inequities across the three Acts. However, the difficulty of combining the three Acts into one is not a valid reason for not embarking on this process of reform more urgently. Having multiple SOPs unnecessarily complicates the claim process and I continue to argue that they should be treated as a guide that is flexible, not strictly interpreted.

It is obvious that much more needs to be done in the area of military compensation and the blueprint from the Productivity Commission will no doubt be a guide for the future of this ever-changing area of the law. The numerous inquiries and legislative changes have not always led to beneficial outcomes, but I am hopeful that this may occur at some stage in the future.

Brian Briggs is a national military compensation expert at Slater + Gordon. EMAIL [e-mail].

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^[1] The DVA uses the term ‘veteran’ to refer to someone with at least a single day of ‘continuous service’ but excludes reservists who have not served on a continuous basis or been on deployment.