Editors --- "Disability support pension: periodic compensation; discretion to disregard if special circumstances exist" [2008] SocSecRpr 1; (2008) 10(1) Social Security Reporter, Article 1

• HANRAHAN and SECRETARY TO THE DEWR
• Background
• Legislation
• Issue
• Discussion
• Decision

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Disability support pension: periodic compensation; discretion to disregard if special circumstances exist

HANRAHAN and SECRETARY TO THE DEWR

(2007/1417)

Decided: 8th June 2007 by N. Isenberg

Background

Hanrahan was injured in two motor vehicle accidents in 1993 and 1994 in which he sustained injuries to his back. He was awarded periodic compensation payments which were paid by the insurer.

Hanrahan also suffered from retinitis pigmentosa, a congenital condition which causes progressive blindness. His first symptoms appeared in the late 1990s.

In August 2001, Hanrahan claimed disability support pension (DSP) on the basis of his visual impairment. Although qualified for DSP because of his loss of vision, Centrelink rejected his claim because of his periodic compensation payments. Hanrahan appealed Centrelink’s decision and in November 2002, the AAT set aside the decision and substituted a new decision. The AAT determined that due to special circumstances, half of Hanrahan’s periodic compensation payments were to be treated as not being made and Hanrahan then received the DSP at a reduced rate.

In October 2005, the insurer, for reasons which are unclear and without further medical assessment, stopped Hanrahan’s periodic compensation payments. He then sought and obtained from Centrelink an increase in his DSP payments.

In March 2006 the Worker’s Compensation Commission reinstated Hanrahan’s periodic compensation payments. Centrelink decided to regard the full amount of Hanrahan’s periodic compensation payments as a direct deduction from his DSP and as a result, his DSP was cancelled. That decision was affirmed on review by an Authorised Review Officer and by the SSAT.

Legislation

Part 3.14 of the Social Security Act 1991 (the Act) provides for compensation affected social security payments, (which, according to s.17(1) of the Act, includes DSP) to be reduced because a person has received compensation or damages made wholly or partly in respect of lost earnings or lost earning capacity resulting from personal injury.

Section 1173 of the Act deals with the effect of periodic compensation payments on the rate of a person’s compensation affected payment. By its operation, Hanrahan’s DSP was reduced on a dollar for dollar basis by the rate of his compensation payments and as the full amount of his compensation payments was greater than the maximum rate of DSP payable to him, his DSP rate was properly calculated to be nil and was cancelled.

Subsection 1184K of the Act provides that the whole or part of a compensation payment may be treated as not having been made if there are special circumstances.

Issue

The issue was whether there were special circumstances requiring the whole or part of the compensation payments to be treated as not having been made.

Discussion

Hanrahan submitted that it was unfair that the blind pension is affected by compensation payments in lieu of income, but is unaffected by income per se. He referred to the circumstances of his visually impaired siblings, both of whom were in full employment and received the blind pension at the full rate as well.

The AAT noted an earlier decision of Lazarus and Secretary, Department of Family and Community Services [2003] AATA 120, where the AAT discussed the amended section 1184K(2) of the Act in relation to a legally blind person and concluded that even though the blindness which gave rise to the compensation affected payment (DSP) and the work related injury which gave rise to the compensation were unrelated it was of itself not a special circumstance. The AAT observed that it was clearly intended that the compensation recovery provisions in Part 3.14 of the Act should be applied to such a situation, unless there are circumstances which arise from the condition of blindness and are of such a nature as to be uncommon, unusual or exceptional.

The AAT in Hanrahan’s case went on to detail at some length the impact of his blindness on his and his wife’s day to day activities, the straitened financial circumstances of the family which was burdened with debt and Hanrahan’s earnest attempts to bring income into the household by fixing lawnmowers ‘by feel and instinct’. His vision would inevitably fail completely. Had the insurer not ceased Hanrahan’s compensation payments and then restarted them again, Hanrahan would in all likelihood have continued to receive DSP on the basis of the 2001 AAT decision which disregarded half of his compensation payments. Hanrahan was disadvantaged compared to other recipients of the blind pension. If he were in employment he would receive the blind pension but because he was injured, and as a result received compensation payments, he did not receive the DSP.

The AAT found that considering Hanrahan’s circumstances ‘in their totality’ they were ‘special’ within the meaning of ss.1184K and would attract the discretion to disregard the entire amount of his compensation payments when assessing his pension rate.

Decision

The decision of the SSAT was set aside. The Tribunal determined that Hanrahan’s compensation payments were to be treated as not having been made and that he was to be paid DSP in full.

[I.T.]