Australia: The NDIS, compensable injury and paybacks

Where a disabled person who is in receipt of National Disability Insurance Scheme (NDIS) supports suffers a compensable injury issues arise as to what effect the compensation will have on the disabled person's ongoing access to NDIS supports and what if any amount may be required to be deducted from the settlement and repaid to the NDIS for past care.

Lawyers are challenged by the difficulty of advising their clients regarding the NDIS. The issue becomes complicated where the NDIS supports costs to be repaid to the NDIS are not at all related to the compensable injury, but to a pre-existing disability, or are in part pre-existing and in part injury-related. The issue is further complicated where the damages for care are for gratuitous care, not paid care for the kinds of supports that may be provided by the NDIS.

TEGAN SHARP v HOME CARE SERVICE OF NEW SOUTH WALES

Tegan, age 26, was born with cerebral palsy, is legally blind and deaf and has profound physical and mental disabilities. She was then injured in an incident in 2012 when she was burnt by hot water while being showered by a carer employed by Home Care Service of NSW. When her legal matter was settled, it was subject to ascertaining the effect of the settlement on NDIS supports for Tegan and the settlement would require court approval pursuant to s76 of the Civil Procedure Act 2005 (NSW) as a person under legal incapacity.

The question of repayment

Carroll & O'Dea Lawyers in Wollongong acted for the plaintiff on instructions from Tegan's father and tutor. A preliminary recovery notice was issued by the National Disability Insurance Agency (NDIA) on the insurer. I wrote to the NDIA outlining the proposed settlement terms and sought information regarding the effect of the settlement on NDIS supports and any claimed repayment.

It was my view that there should be no repayment at all, as the care provided was for Tegan's lifelong disabilities, not the compensable injury.

The need for care prior to the accident was clearly established given that Tegan was injured while she was in care, had received care for many years, and will require care for the rest of her life.

The NDIS plan related to supports for her lifelong disabilities and not her burn injury. Tegan's father had deliberately not requested any NDIS supports for her burns when he applied for NDIA care and therefore believed that no NDIS supports for the past were repayable.

The NDIA advised that it had determined the estimated recoverable amount to be $34,000, pursuant to s107 of the National Disability Insurance Scheme Act 2013 (Cth) (NDIS Act) which states:

  1. This section applies if:
    1. an amount of compensation is fixed under a consent judgement or settlement in respect of a personal injury that has caused, to any extent, a participant's impairment (whether or not the participant was a participant at the time of the injury); and
    2. before the day of the consent judgement or settlement, NDIS amounts (the past NDIS amounts) had been paid in respect of supports in relation to the participant's.
  1. An amount (the recoverable amount) is payable by the participant to the Agency. The recoverable amount is an amount equal to:
    1. unless subsection (4) applies–the sum of the past NDIS amounts, reduced as mentioned in subsection (3) (if applicable); or
    2. if subsection (4) applies–the amount worked out in accordance with that.
  1. If:
    1. the consent judgement or settlement fixes the amount of compensation on the basis that liability for the injury should be apportioned between the participant and another person; and
    2. as a result, the amount of compensation is less than it would have been if liability had not been so apportioned;
    3. the sum of the past NDIS amounts is to be reduced by the proportion corresponding to the proportion of liability that is apportioned to the participant by the consent judgement or settlement.

  1. If the recoverable amount would, apart from this subsection, exceed the difference (if any) between:
    1. the amount of compensation fixed under the consent judgement or settlement; and
    2. the sum of the amounts (if any) payable in respect of the amount of compensation under the following:
      1. the Health and Other Services (Compensation) Act 1995;
      2. the Health and Other Services (Compensation) Care Charges Act 1995;
      3. Part 3.14 of the Social Security Act 1991;
      4. a law of the Commonwealth, a State or a Territory, prescribed by the National Disability Insurance Scheme rules;

    the recoverable amount is taken to be the amount of the difference.'

Compensable injury v lifelong disability

According to the interpretation adopted by the NDIA, those provisions result in all past care being repayable to the NDIA on the basis that where a compensable injury has caused, to any extent, a participant's impairment (the burn injuries presumably having caused an impairment), the recoverable amount is the sum of all past supports. There is no provision for apportionment should only certain components of the care be injury-related. All NDIS supports were repayable on the NDIA's calculation.

This view was predicated on the basis that the NDIS is designed to complement, not replace, existing compensation arrangements for personal injury and participants with access to compensation must continue to use these funds to provide for their disability support needs. It was also on the basis that damages for care, whether gratuitous or not, were claimed to be of a kind of support provided by the NDIS.

There seemed to be no consideration given to Tegan's rights to retain her NDIS supports for her lifelong disabilities or retain her compensation. People with disabilities should not be disadvantaged by way of settlements because of a requirement to repay all NDIS supports even when unrelated to their compensable injury from settlements which do not include an amount for such repayment because the defendant cannot be sued for such unrelated amounts.

Correspondence was sent to the NDIA and submissions made, and as the months passed by with Tegan continuing to receive further NDIS supports, the recoverable amount increased to $136,000 before falling to $106,000 after the NDIS was prepared to deduct the cost of some equipment from the $136,000 which obviously related to her lifelong disabilities.

Future care

More concerning for the family was Tegan's access to future NDIS supports. The NDIA indicated that the Compensation Rules state that the NDIA may (but does not have to) advise in relation to the likely Compensation Reduction Amount (CRA) or elements of the CRA that would apply in relation to a settlement or agreement;1 however, operational requirements precluded the NDIA from advising on a likely CRA.

All correspondence, phone calls and a face-to-face meeting when Tegan's plan was reviewed in an attempt to extract advice regarding the CRA for the future or resolve these issues were unsuccessful.

Given that the NDIS claimed repayment was increasing over time, I was concerned to have the matter listed before the court for approval as soon as possible. However, I was not satisfied with the information I received from the NDIS regarding the repayment and could not properly advise the client regarding her future.

The court case

Ultimately the matter was put before the court for approval, along with the concerns regarding the NDIS repayment and future care. A subpoena was issued on the NDIA and it was asked to appear in order to assist the court on the NDIA issues. However, no representatives of the NDIA were prepared to appear.2

Her Honour Justice Lonergan approved the settlement and in doing so she considered the situation in relation to the NDIS: Tegan Sharp v Home Care Service of NSW [2018] NSWSC 1319.

Her Honour noted: 'It seems to me that this application for approval of the settlement requires me to identify the approximate net sum the plaintiff will have for her benefit in resolution of these legal issues. Because the NDIS have made a potentially very large claim affecting this sum, it does involve me in an exercise of analysis dealing with "the purpose of this Act" in broad terms.'3

Her Honour observed:

'Within the affidavit of Ms Chieffe is evidence of repeated, courteous and clear articulation of the facts and the plaintiff's claim and arguments as to why there ought to be no payback due to the NDIS from the settlement sum I am today to approve.
The responses of the NDIA, as correctly pointed out by Mr Andrews, have either deliberately avoided the issues raised, or discourteously simply been responded to by apparently pre-formatted correspondence that makes no effort to consider or deal with the issues properly raised by the plaintiff's solicitor relating to the payback question.
For reasons that are completely opaque to analysis, the NDIA has claimed on different occasions initially $34,000, then four months later, $136,000, and then later still, $106,000, as being the proper payback due to it.
The absence of reasons for these alarmingly disparate figures underpins a concern I have that these figures sought are without any proper basis.
This concern is further highlighted by the undoubtedly correct legislative analysis provided by Mr Andrews to this court today, that illustrates, in my view, that the NDIA has no proper basis to claim any payback at all in the circumstances of this case.'4

Defining 'supports'

Her Honour considered the type of supports claimed in the matter and the type of supports provided by the NDIS. She noted the evidence from the plaintiff's father that the NDIS supports were for Tegan's pre-existing condition and the care claimed for the plaintiff in the Statement of Particulars was on a gratuitous basis for additional care provided by and continuing to be provided by her immediate family, including her parents. This was particularly related to emotional distress and the need for parental presence and support when being showered, due to Tegan's fears associated with that necessary daily task.5

It was submitted that as damages for care were on a gratuitous basis only, no repayment should be required as this is not support of a kind that can be provided by the NDIS.

Her Honour considered the General Principles Guiding Actions under the NDIS Act which included an acknowledgment of people with a disability needing to be supported to receive supports outside the NDIS.6

The court considered the definition of 'supports', which is defined in s9 to include general supports. A distinction had been raised by the NDIA in correspondence between 'general supports' and the NDIA claimed entitlement to repayment of 'reasonable and necessary supports' funded under the participant's plan. Her Honour was of the view that gratuitous care provided by the parents and family would fit the description of 'general supports' that are specifically excluded from funding by the NDIS, and this should therefore also be excluded from payback.7

In the end Her Honour found that no amount could be repayable to the NDIS, as its supports related to Tegan's pre-existing disability, not an impairment for which the NDIS has provided any service, and the settlement comprised damages for unpaid care, to be provided by the family, not a registered care provider.

Her Honour concluded that '...no sum at all is due to the NDIA/NDIS, either now or in the future, from the compensation figure' and asked that the CEO exercise discretion not to pursue repayments, should the NDIA consider that there is a payback contrary to her view.8

Her Honour observed 'it is difficult to understand why an organisation constructed to assist in the funding and empowerment of people with disabilities to function in society, fails to respond to court process or to address proper, carefully considered correspondence from legal advisors to such persons'9 and it is 'highly unsatisfactory that the plaintiff and her tutor, her family and their legal representatives are left in unexplained, bureaucratic uncertainty as to what amount is to be repaid to the NDIA/NDIS' .10

AB BY HER TUTOR MB v STATE OF NSW AND ANOR

Another decision of the Supreme Court of NSW in which a similar problem arose due to a failure by the NDIA to identify the repayment figure is the decision in AB by her tutor MB v State of New South Wales and Anor [2018] NSWSC 765. Justice Johnson in that decision stated:

'It is highly desirable that persons in the position of MB and AB have some certainty as to their position when an application such as this is brought before the court.'11

Conclusion

These decisions highlight the difficulties experienced by disabled persons receiving NDIS supports and their families; the difficulties faced by lawyers advising on settlements; and the difficulty of the court in considering approval because of the NDIA's refusal to appropriately consider and determine the properly legislatively sanctioned payback due to it.

Senator Jordon Steele-John of Western Australia was concerned about Tegan's case and was a supportive advocate for Tegan on this issue. On his invitation, I attended a meeting of the Joint Senate Standing Committee of the NDIS in Canberra in November 2018 to discuss Tegan's case, the repayments sought in the above circumstances, and the difficulties experienced by lawyers in obtaining information when dealing with the NDIA. One suggestion I made was that the NDIA adopt the Medicare procedure for repayments for any injury-related past care. I understand the Committee is working on the system and I hope there may be some improvement in the future. Lawyers are encouraged to contact Senator Jordon Steele-John to provide further case examples to assist with this effort: senator.steele-john@aph.gov.au.

This article – 'The NDIS, compensable injury and paybacks' – first appeared in Precedent, the journal of the Australian Lawyers Alliance, issue 152, published in June 2019 (Sydney, Australia, ISSN 1449-7719), pp 50-53. It has been reproduced with the kind permission of the author and the ALA. For more information about the ALA, please go to: www.lawyersalliance.com.au.

FootNotes

1 National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013, Rule 3.8.

2 Tegan Sharp v Home Care Service of NSW [2018] NSWSC 1319, [41]-[42].

3 Ibid, [39].

4 Ibid, [16]-[20].

5 Ibid, [9]-[10].

6 Ibid, [24]-[25].

7 Ibid, [36].

8 Ibid, [50]-[51].

9 Ibid, [43].

10 Ibid, [49].

11 AB by her tutor MB v State of New South Wales and Anor [2018] NSWSC 765, [20].

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