DLYS and National Disability Insurance Agency
[2023] AATA 2965
•28 August 2023
DLYS and National Disability Insurance Agency [2023] AATA 2965 (28 August 2023)
Division:NATIONAL DISABILITY INSURANCE SCHEME DIVISION
File Number: 2021/3589
Re:DLYS
APPLICANT
AndNational Disability Insurance Agency
RESPONDENT
DECISION
Tribunal:Senior Member K Buxton
Date:28 August 2023
Place:Brisbane
The Tribunal sets aside the decision under review and remits the matter to the Respondent for reconsideration with the direction that the Compensation Reduction Amount, be re-calculated with the subtraction of the amount of $41,317.40 incurred in obtaining a statutory will, be given effect from 11 December 2020.
.......[sgn].................................................................
Senior Member K Buxton
Catchwords
NATIONAL DISABILITY INSURANCE SCHEME – Compensation – Compensation Reduction Amount – damages in respect of personal injury – special circumstances – set aside and remittedLegislation
Administrative Appeals Tribunal Act 1975 (Cth) ss 35, 42D
National Disability Insurance Scheme Act 2013 (Cth) ss 34, 35, 100
National Disability Insurance Scheme (Supports for Participants) Rules 2013 (Cth) rr 5.1 7.5
National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (Cth) rr 1.1, 3.7, 3.10, 3.11, 3.12, 3.13, 3.14Cases
Beadle and Director-General of Social Security (1984) AATA 176
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
McGarrigle v National Disability Insurance Agency (2017) 252 FCR 121
Pavlakis and National Disability Insurance Agency [2023] AATA 2485
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Whittaker and National Disability Insurance Agency [2022] AATA 729
RTRH and National Disability Insurance Agency [2022] AATA 205
QDKH, by his litigation representative BGJF v National Disability Insurance Agency [2021] FCAFC 189
Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250; [2019] HCA 16
Rogers and National Disability Insurance Agency [2022] AATA 2809
Klewer v National Disability Insurance Agency [2023] FCA 630REASONS FOR DECISION
Senior Member K Buxton
28 August 2023
The Applicant is 22 years old and lives with her carer, Ms A, and family. She has applied for review of a decision made by a delegate of the Chief Executive Officer (CEO) of the Respondent dated 6 May 2021 pursuant to section 100 of the National Disability Insurance Scheme Act 2013 (Cth) (the NDIS Act). A hearing of the review application was conducted by the Tribunal on 2 August 2023 using the digital platform Microsoft Teams. A bundle of relevant documents, including the section 37(1) documents, submissions by the parties and witness statements, were admitted during the hearing and marked exhibit one, brief further evidence was also submitted by the Respondent on 17 August 2023 and added to the Tribunal Bundle. Where necessary, the evidence referred to in these reasons is identified by reference to the Tribunal Bundle.
The Applicant sustained a traumatic brain injury as an infant and developed an intellectual disability, epilepsy, and microcephaly.[1] In 2013 the Applicant commenced proceedings in the Supreme Court of New South Wales claiming compensation for her injuries against her biological parents and the state of New South Wales.[2] The claim was compromised, and the agreed settlement of $5,500,000 was sanctioned by a Judge of the Supreme Court of New South Wales in 2013.[3] Since 2019, the Applicant has been a participant in the National Disability Insurance Scheme (NDIS).
[1] TB p.292.
[2] TB 13, from p.528.
[3] TB p.290.
Chapter 5 of the NDIS Act imposes consequences upon participants who do not take action to obtain compensation for personal injuries and provides a mechanism for taking account of any parts of a payment of such compensation that have been received by a scheme participant. The Parliament has passed rules, with statutory force,[4] for the purpose of determining the extent to which funding for reasonable and necessary supports should be reduced to take account of compensation that has been received by participants. A formula is provided in the National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (the Compensation Rules), which leads to the calculation of a Compensation Reduction Amount (CRA) which is a sum by which funding for a participant’s supports can be reduced to account for the fact that the participant has also received compensation from which such costs can be met. In specified circumstances, the formula allows for the amortisation of the total CRA across a period no longer than the remainder of the participants expected life and is to be calculated in accordance with accepted actuarial modelling and practices.
[4] Passed pursuant to s.35(4) of the NDIS Act; see also s.209 NDIS Act.
The Applicant had a CRA applied to her funded supports specified in her statement of participant supports (SPS) on 11 December 2020. Initially, the Respondent calculated the CRA in the total sum of $4,441,618.30. As a result, the sum of $131,747.02 was applied to the funded supports in the plan dated 11 December 2020.[5] On 10 February 2021, the Applicant made an application for the CEO to ignore the whole or part of her calculated CRA due to special circumstances. She relied upon Rule 3.10 of the Compensation rules. The Tribunal notes that such a decision is not separately reviewable under section 99(1) of the NDIS Act, but forms part of the approval of the SPS. The Applicant’s special circumstances application was refused on 6 April 2021.
[5] Letter 5 May 2021, TB p.405, although this does not match with the reduction to funded supports set out in the printed plan at HB p.43, see HB p.47 in particular.
On 12 February 2021 the Applicant sought internal review of the decision to approve the SPS, which is reviewable under section 99(1) (item 4) of the NDIS Act. She again raised the issue of the calculation of her CRA and noted that this issue was being “separately addressed” (referring, presumably, to the request under Rule 3.10).
In the Respondent’s statement of Facts, Issues and Contentions, it is suggested that the Respondent made two decisions in a two-day time frame in early May 2021. The first was described as a decision to issue a new NDIS plan, on 5 May 2021. The second was described as a reviewable decision under section 100, on 6 May 2021, in relation to the Applicant’s SPS. The Respondent then submitted that the Respondent’s CRA decision and the reviewable decision were reflected in the Applicant’s SPS in her NDIS plan of 5 May 2021.
The “new plan”[6], dated 5 May 2021, was not a new plan in the sense contemplated by section 37 of the NDIS Act. It was the product of an internal review decision, not the product of the process described in sections 48 and 49 of the NDIS Act. The plan in effect in early May 2021 was the plan dated 11 December 2020[7] as this plan had not been replaced by another plan under Division 4. An aspect of this plan, being the approved SPS, had been the subject of a decision, under section 100(6) of the NDIS Act and the effect of that decision was to substitute a new SPS into the existing plan – but not to make a new plan.
[6] The details of which are set out in paragraph 17 of the Respondent’s SFIC, TB p.488.
[7] Because the 11 December 2020 plan had not been replaced by another plan under Division 4, as is required by s.37(3) of the NDIS Act in order for an existing plan to cease to be in effect.
The better view of the decision-making activity of the Respondent in early May 2021 is that, through the internal review process, a decision was made on or about 5 May 2021, pursuant to section 100 of the NDIS Act, to set aside the earlier approved SPS and replace it with the SPS set out in the document dated 5 May 2021 and described by the Respondent as a “new plan” with funding specified for the period 3 May 2021 to 3 February 2022 (the reassessment date). On 1 June 2021 the Applicant applied to the Tribunal for review.
A third decision was communicated to the Applicant by the Respondent in early May 2021. By letter dated 5 May 2021 the Respondent notified the Applicant that the CRA calculations had been reviewed, although this was described as a “quality review” rather than a section 100 review. The Tribunal notes that, whilst it is not clear who undertook the actual review, the same person drafted the notification of both the 6 April 2021 decision and the 5 May 2021 decision. Aspects of this third decision informed the decision to set aside the earlier approved SPS and replace it with the SPS set out in the document described as a new plan and dated 5 May 2021. The parties contended that the review application, lodged on 1 June 2021, validly sought to review the supports, the reduction in funding due to the application of the CRA and the decision relating to the request to disregard part of the compensation received by the Applicant on the basis of special circumstances. The Applicant’s review application squarely raises all of these issues and identified as reviewable the section 100 decision of the Respondent dated 6 May 2021. The review application can be treated as an application to review the relevant aspects of the Respondent’s decision-making on 6 May 2021, the first made with respect to the original section 33(2) approval and the second in relation to the decision disregarding part of the compensation under Compensation Rule 3.10. The Tribunal accepts the parties’ contention, and is satisfied that there is jurisdiction to consider, in this application, all issues raised by the Applicant in relation to the CRA, following the same reasoning applied in Whittaker and National Disability Insurance Agency:[8]
The Tribunal’s task is to stand in the shoes of the Respondent and make the correct or preferable decision on the material before it.[9] The Tribunal is to determine whether the correct or preferable decision is to approve the statement of participant supports insofar as it applies a reduction to the funded supports on account of the amount received by the Applicant from the sanctioned settlement of his claim and, if not, to set aside that decision and remit it for approval in accordance with the correct approach to the issue of any reduction.[10]
[8] Whittaker and National Disability Insurance Agency [2022] AATA 729 at [8].
[9] Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286, [37]-[38], [45]-[46] (Kirby J), [99] (Hayne and Heydon JJ), [140]-[143] (Kiefel J); Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60.
[10] McGarrigle v National Disability Insurance Agency [2017] FCA 308; (2017) 252 FCR 121, [85].
In QDKH and the National Disability Insurance Agency (“QDKH”)[11] the Full Court of the Federal Court,[12] in the setting of a review of this nature, noted that the decision whether to ‘approve’ a ‘statement of participant supports’ under subsection 33(2) of the NDIS Act was informed by the scope of that provision.[13]In Minister for Immigration and Border Protection v Makasa,[14] the High Court stated: “[t]he function of the AAT … is “to do over again” that which was done by the primary decision-maker”.[15] Consistent with this approach, the Tribunal is not limited to consideration of matters at the time of the internal review decision, rather it is obliged to consider the totality of relevant matters from the date the original decision first had (or could have had) effect.[16] That the Respondent, in the reviewable decision made under section 100, did not specify any additional funded supports or changes to the application of the CRA for the period from 11 December 2020 to 2 May 2021 does not alter the scope of the issues in respect of which the Applicant was entitled to seek review. For these reasons, the Tribunal has jurisdiction to undertake a further merits review (following the section 100 review) of the statement of participant supports approved, under section 33(2) of the NDIS Act and used in the participant’s plan from 11 December 2020.
[11] QDKH, by his litigation representative BGJF v National Disability Insurance Agency [2021] FCAFC 189.
[12] Applying the reasoning in Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250; [2019] HCA 16 (15 May 2019): [14]-[15]; [51].
[13] QDKH, [10(b)]; discussed in Rogers and National Disability Insurance Agency [2022] AATA 2809 at [16].
[14] [2021] HCA 1.
[15] Ibid, [50].
[16] RTRH and National Disability Insurance Agency [2022] AATA 205 at [93]. See also QDKH v National Disability Insurance Agency [2021] FCAFC 189 at [7].
The decision under review has been remitted to a delegate under section 42D of the Administrative Appeals Tribunal Act1975 (Cth) (the AAT Act) on a number of occasions since the review application was lodged. Following these section 42D remittals, the Respondent has specified additional funded supports in the SPS. The latest of these decisions, made by the Respondent on 5 June 2023 following remittal by the Tribunal on 24 May 2023, is the reviewable decision, and the Applicant has elected to proceed with the review of the new decision,[17] being the decision to set aside the previous approved SPS and replace it with the updated statement.
[17] See AAT Act s.42D(4).
By operation of section 42D of the AAT Act, the latest reconsidered decision of 5 June 2023 became the reviewable decision. However, because section 48 of the NDIS Act has not been engaged, and for the reasons set out in the decision of Pavlakis and National Disability Insurance Agency,[18] that decision cannot operate as a “new” plan. When exercising powers on remittal, the delegate can only make a decision that is open to the Tribunal on review, and that review is limited to a reconsideration of the approved SPS in an existing plan. To the extent that the 5 June 2023 decision purports to operate as a “new plan” that part of the decision is beyond power and therefore does not affect the review jurisdiction of the Tribunal on review.[19] The Tribunal is satisfied that the 5 June 2023 decision has the effect of setting aside the earlier reviewable decision and substituting a decision to approve a statement of participant supports with the additional funded supports and re-assessment date specified. It follows that the Tribunal’s jurisdiction in this case extends to a reconsideration of all aspects of the SPS that could have been considered by the delegate in the original decision, made on 11 December 2020 (including the application of a CRA).
[18] [2023] AATA 2485 (10 August 2023), [14] to [39]; cf Klewer v National Disability Insurance Agency [2023] FCA 630.
[19] Pavlakis and National Disability Insurance Agency [2023] AATA 2485 at [26], [29] – [30].
Whilst all issues relating to the identification of the Applicant’s reasonable and necessary supports have been resolved, and there is no evidence before the Tribunal that any decision should be made in relation to those funded supports that differs from the supports specified in the reviewable decision, there remains one contentious issue relating to the extent to which those supports will be funded. The relevant funding specified in the Applicant’s SPS has been reduced by the Respondent through the application of a CRA applied for the period of the SPS.[20] It is in respect of this particular aspect of the reviewable decision that the parties remain in dispute and therefore, in these proceedings, the issue for determination is the correct the application of a CRA to the Applicant’s funded supports.
[20] TB p,405 letter dated 5 May 2021.
Calculating the CRA
In providing to the Applicant information that set out the Respondent’s calculation of the CRA from May 2021 onwards, the Respondent set out the following calculations:[21]
[21] TB p.405 letter dated 5 May 2021.
NDIS Rule application 3.13 Figure
Compensation settlement $5,500,000.00
Subtract Medicare repayment $8,601.65
Subtract Centrelink repayment $0
Subtract value of any period of preclusion
from a statutory scheme of entitlements, for
example Centrelink (or 50% if a preclusion
period has not been applied and economic
loss has been awarded) $2,741,398.35
SUBTOTAL $2,741,398.35
Subtract NDIS Type supports paid for or on $456,222.70
behalf of DLYS from 27 June 2003 to 18
February 2019
Subtract any Compensation Reduction $53,683.05
amounts that would have been applied to earlier
NDIS plans
Total Compensation Reduction Amount $2,232,839.79
calculated under Rule 3.13
Subtract repayments to Victims Services $53,683.05
and people care service under Rule 3.10
Subtract the Compensation Reduction
Amounts that would have been applied to
earlier NDIS Plans but have been ignored by
applying Special Circumstances under Rule 3.10 $107,344.32
Total Compensation Reduction Amount $2,071.812.42
Over time, the Respondent has prepared updated calculations of the appropriate CRA figure and seems to have applied these updated figures to the further decisions arrived at by reconsideration following the remittals made by the Tribunal under section 42D of the AAT Act. It is not clear, in the material before the Tribunal, from when the updated calculations have been applied to the Applicant’s SPS. The basis for the updated calculation used in the 5 June 2023 decision (following remittal under section 42D of the AAT Act) was set out and explained in some detail in an affidavit made by the Scheme Actuary, Mr David Gifford, on 23 June 2023 but, again, it is not clear from when this calculation has been applied to the Applicant’s SPS.[22]
[22] TB p.469. This document is subject to a s.35 confidentiality order.
In calculating and applying the CRA, the Respondent has relied upon particular provisions of the Compensation Rules. The Tribunal’s task is to stand in the shoes of the decision-maker and arrive at the correct or preferable decision on the material before it.[23] The Tribunal is to determine whether the correct or preferable decision is to approve the SPS insofar as it applies a reduction to the funded supports as calculated and, if not, to set aside that decision and remit it for approval in accordance with the correct approach to the issue of any reduction.[24] In doing so, the Tribunal may consider whether it is appropriate, in the special circumstances of the case, to disregard any part of the compensation received by the Applicant.
[23] Shi v Migration Agents Registration Authority (2008) 235 CLR 286, [37]-[38], [45]-[46] (Kirby J), [99] (Hayne and Heydon JJ), [140]-[143] (Kiefel J); Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60.
[24] McGarrigle v NDIA (2017) 252 FCR 121, [85].
Rule 1.1 of the Compensation Rules includes the following statement of purpose:
These Rules are about ensuring that where individuals receive compensation payments, the NDIS does not duplicate the funding for supports already provided for by these payments.
“Compensation” is defined in section 11 of the NDIS Act, relevantly, as a payment (with or without admission of liability) in respect of compensation or damages in respect of personal injury, in settlement of a claim for damages 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). As the Applicant has received a payment in respect of her damages claim, this payment falls within the definition of “compensation” under section 11(1) of the NDIS Act.
The parties accepted, and the Tribunal finds, that any CRA should be calculated under Compensation Rules 3.13(e) and 3.14. Various deeming provisions apply to the calculation of the CRA, in a way that appears designed to achieve parity in the treatment of lump sum settlements received in personal injuries claims. The relevant provisions allow for a beneficial calculation of the CRA to take place if the deeming provisions result in a higher “subtotal” of assessable compensation than the calculation of lifetime cost arrived at by the scheme actuary, applying Compensation Rule 3.13(e), and using the applicable actuarial model published by the Respondent on its website at the time of the calculation (Compensation Rule 3.14).
Relevantly, s 3.13(e) provides:
if the amount after applying paragraphs (a) to (d) is greater than the value of the reasonable and necessary supports that the CEO considers would have been provided to the participant and funded under the Act over the participant’s expected lifetime, had the participant been a participant from the time of the compensable event—replace the amount by that value;
21.The process in s 3.13(e) must be carried out in the manner prescribed by s 3.14 of the Compensation Rules, which provide:
For paragraph 3.13(e), the calculation must be in accordance with any applicable actuarial model published by the Agency on its website at the time the calculation is undertaken.
The CRA calculation in this case has not utilized the lifetime cost figure. The evidence contained in a letter from Mr Guy Thorburn, Australian Government Actuary, to Mr David Gifford, Scheme Actuary of the NDIS, dated 24 July 2023,[25] indicates that the lifetime cost estimate would be significantly greater than the alternative mechanism and would not, therefore, be appropriate for use in the section 3.13(e) calculation. The Respondent submits, and the Applicant accepts, that the appropriate actuarial model was used, and this resulted in the more beneficial figure of $2,232,839.79 being correctly utilized in the CRA calculation provided on 5 May 2021. The Tribunal accepts the evidence of Mr Thorburn, and the supporting information provided in the statement of Mr Gifford and attachments demonstrating that relevant underlying assumptions had been correctly considered and calculated by the scheme actuary in this case both in the section 100 decision and in subsequent decisions made following remittals by the Tribunal.[26]
[25] TB p.521 (TB 12).
[26] Where appropriate, the Tribunal has made orders under section 35 of the AAT Act to protect the confidential nature of the information provided by the Respondent about assumptions underlying the relevant calculations.
Special Circumstances
Notwithstanding the correctness of the actuarial approach, the Applicant submitted[27] that the Tribunal should exercise the discretion in Compensation Rule 3.10 to disregard a part of the Applicant’s compensation in a way that would lead to a more beneficial calculation of the CRA to be applied to her current plan. That rule provides:
3.10 For the purpose of paragraph 3.5, the CEO may ignore the whole or part of a compensation reduction amount that would otherwise arise under this Part if the CEO thinks it is appropriate to do so in the special circumstances of the case (which may include financial hardship suffered by the participant).
[27] TB p.484.
Rule 3.5 provides for the CEO to take account of the compensation received by a participant by reducing the funding that would otherwise be provided for reasonable and necessary supports by the appropriate CRA. Where the compensation has been received under a judgement or settlement satisfying Rule 3.1 (here, 3.1(b), Rule 3.7 provides that the reduction may be amortised over a period no longer than the remainder of the participant’s expected lifetime in accordance with accepted actuarial standards, in consultation with the scheme actuary.
The Applicant had contended, prior to hearing, that this case was special, with factors that set it apart from the usual run of cases, because the Applicant has had to incur the following, significant, legal costs since the settlement in respect of the management of her financial and personal affairs:
(a) Application to the Supreme Court of Queensland for the issue of a Statutory will: $41,317.40[28]
(b) Application to appoint Ability One Pty Ltd as Financial Manager: $86,064.60
(c) Application to QCAT for the appointment of a Guardian: $9,140.20
(d) Application for equitable compensation for mismanagement of her financial affairs against the New South Wales Trustee and Guardian: $45,000
[28] Undertaken in July 2015 – Statement of Ms A dated 14 September 2021, [18].
At the beginning of the hearing the parties submitted that the costs identified in (a) and (d) above were no longer in issue. The Respondent had accepted that the costs related to the statutory will in (a) above amounted to a special circumstance and should be subtracted from the amount used for the CRA calculations. The Tribunal accepts the Respondent’s submission that this is the correct treatment of these costs as the application for the statutory will was protective in nature given that the Applicant’s biological parents would otherwise be her beneficiaries and serious findings had been made against the mother in relation to the Applicant’s injuries. It appears to the Tribunal that the Respondent has incorporated those costs into the re-calculated CRA included in the reviewable decision made on 5 June 2023, but it is unclear from what date that decision has been given effect. The Applicant withdrew the submission that costs incurred in the equitable compensation claim amounted to special circumstances because a negotiated resolution of that claim had included a payment for her costs.
As to the remaining costs, identified in (c) and (d) above, the Applicant submitted that, as a result of malfeasance on the part of her previous Guardian, the New South Wales Trustee and Guardian, she was required to seek a new Guardian and Financial Manager and that, together, the legal fees amounted to close to $100,000.
No information was provided about the fruits of the action for compensation against the New South Wales Trustee and Guardian which the Tribunal was left to infer was the basis of the assertion of malfeasance. During the hearing, the Applicant tendered the relevant statement of claim.[29] It transpired that the claim was for losses allegedly sustained by the Applicant as a result of a 14-month delay in investing the settlement sum received by the Applicant. No claim was made in those proceedings in relation to the replacement of financial managers for the Applicant or for any associated costs. The action was settled by way a confidential deed and payment of a sum of money not disclosed to the Tribunal because of the confidentiality obligations created by that deed.
[29] This was added to the TB from page 528, (TB 13).
The evidence provided by Ms A, in her statement dated 19 September 2021,[30] is insufficient to support the contention that it was necessary to replace the previous Guardian, the New South Wales Trustee and Guardian, with herself as the new Guardian and with an independent Financial Manager. The fact that substantial legal fees were incurred in both processes is suggestive that the other parties to those applications opposed the relief sought. The replacement of her guardian and administrator may have been a choice by the Applicant and those advising her. The Tribunal is not positively satisfied that the Applicant was compelled to incur these costs. In any event, the Tribunal is not satisfied that the appointment of an alternative guardian or financial administrator is unusual, uncommon, or against the run of usual circumstances for a young woman with an acquired brain injury with substantial assets that require ongoing management. The Tribunal accepts the Respondent’s submission that no special circumstances arise in this case that would make it appropriate to disregard an amount equivalent to the legal fees incurred by the Applicant, even at the substantial level seen here, to replace her previous Guardian, the New South Wales Trustee and Guardian, with a new Guardian and Financial Manager.
[30] TB p.411.
The Applicant submitted that a special circumstance also arose in this case because, in the proper calculation of the compensation amount under Compensation Rules 3.13(e) and 3.14, the underlying assumptions about the Applicant’s life expectancy applied in the calculation of the CRA are not correct. The Applicant submitted that it was correct to utilize life expectancy of 73.4 years, instead of the shorter life expectancy of 53.3 years arrived at by the actuary, for the process of amortising the CRA over time. The Applicant submitted that, if the longer life expectancy had been used, the CRA applied to her plan would be significantly lower.[31] It was further submitted that it is proper to ignore whatever part of the would be CRA necessary in order to arrive at the CRA that would have been applied to the Applicant’s plan if the longer life expectancy had been used to amortise, and there were special circumstances in this case such that is was appropriate for the Tribunal to exercise this discretion in favour of the Applicant. The Applicant submitted that the use of the life expectancy arrived at using the information at the disposal of the scheme actuary, rather than the longer life expectancy for which the Applicant contended, had a “profound effect” on the calculation of the CRA when applied to her plan. The Applicant submitted that the difference in outcome was a reduction to the CRA of about $24,000 annually[32] for the Applicant’s plan. The Respondent accepted the approximate correctness of the calculation (but not the appropriateness of its application to this case).[33]
[31] 53.3 years in 2019, according to the Applicant’s submission.
[32] A figure arrived at using the total CRA and dividing it by the difference between the life expectancy adopted in the Respondent’s CRA amortisation process and the life expectancy contended for by the Applicant, but without reducing, or disregarding, any amount of the CRA.
[33] Post-hearing submission and spreadsheet lodged by the Respondent on 17 August 2023.
The Respondent has provided to the Tribunal an affidavit of David Gifford, Scheme Actuary, sworn 23 June 2023[34] containing particulars of the aspects of the calculation of the sum of $2,036,493.48, arrived at under Compensation Rules 3.13(e) and 3.14, including relevant data about life expectancy. The actuarial approach taken in the Gifford affidavit was endorsed by Mr Guy Thorburn, Australian Government Actuary, in his letter dated 24 July 2023.[35] In arriving at an appropriate life expectancy to be used for the Applicant in amortising the CRA, the actuarial approach involves utilizing available data sets having regard to the fact that the Applicant is female, is an Indigenous Australian, has a brain injury and a functional impairment. It is an approach which the Applicant accepts for the purpose of Compensation Rule 3.13. However, the Applicant submitted that, whilst it is correct to approach the CRA calculation in this way, there is no evidence to support a life expectancy for the Applicant that may be truncated by factors such as her brain injury or level of impairment. It would follow, according to the Applicant, that it remained open to the Tribunal to find that an element of that calculation leads to an outcome which would enliven the discretion to find that special circumstances exist in this case.
[34] TB p.469.
[35] TB 13, from p.528.
The Respondent submitted that its earlier decision, to refuse to replace the life expectancy estimate of 53.3 years for the Applicant with the life expectances of 73.4 years adopted by Ms Nancy Stephenson, OT, in her report dated 30 January 2019, was the correct one and that no special circumstances should apply to, in effect, vary that decision. The Respondent submitted that an interpretation of the CRA scheme that was unnecessarily broad should be rejected because this would have flow-on consequences for the financial sustainability of the scheme. The Respondent did not produce evidence to connect the Applicant’s requests in this case to any impacts upon the financial sustainability of the scheme. The Tribunal notes that the scheme is to be enforced and that it does contemplate within it the consideration of any relevant special circumstances.
On the question of the “correct” estimated life expectancy, Ms Stephenson gave oral evidence during the hearing to the effect that she adopted the figure of 53.3 years in her report, in 2019, because it was appropriate to use data available at that time as to the life expectancy of a person who was both female and Indigenous, and that she had done so by reference to appropriate, available, and reliable data sets. Ms Stephenson stated that she did not have access to medical information at that time to suggest that the Applicant’s life expectancy may be truncated by other factors. Ms Stephenson also accepted that she did not have a level of expertise to determine a person’s life expectancy, but that factors such as a safe and stable home, good gastro-intestinal health care and levels of protective care that were available for the Applicant at home would eliminate some risk factors seen in people with brain injuries who lack such a home environ.
The Tribunal notes that the information available to the Respondent, and the information available to Ms Stephenson, differ. There is nothing unusual or special about the Respondent’s use of additional, or different, available information to arrive at a life expectancy for the Applicant. The Applicant accepted that it was appropriate for the Respondent to take account of the fact that the Applicant is female and Indigenous. These were the only data points used in the data adopted in the report of Ms Stephenson. The Office of the Scheme Actuary has accessed additional information about average life expectancy having regard to additional data points such as the Applicant’s brain injury and functional impairment. The Tribunal notes and accepts the stated limitations on the size of the sample used by the scheme actuary to arrive at his conclusion. However, that does not lead the Tribunal to conclude that the application of this additional information makes the predicted life expectancy figure less likely to be correct than the figure adopted by Ms Stephenson in a report written four years ago and without access to the data used by the scheme actuary. The Tribunal is not in a position to determine which estimate is more reliable and does not have to, in order to consider the Applicant’s request.
The purpose of the Compensation Rules is to ensure that the NDIS does not duplicate funding that a participant has already received through compensation for personal injury. The Rules provide for the Applicant to have resort to her compensation to fund, at least in part, her NDIS supports. The amortisation of the CRA across her expected lifespan is a process beneficial to the Applicant that has the effect of temporally spreading out her own contributions to these supports over many years, rather than requiring her to fund all supports from her compensation until it is exhausted. The Tribunal notes that Compensation Rule 3.7 allows for amortisation of the calculated CRA over a period no longer than the remainder of the participant’s life expectancy, suggesting that the Respondent could elect a shorter time than a participant’s life expectancy if it were thought appropriate to do so in order to give effect to the statutory aim that the scheme complements, but does not replace, compensation arrangements.
The reasonable expectation inherent in the statutory scheme is that the Applicant’s remaining compensation will be available in order to fund the part of her NDIS supports for which funding has been reduced by the application of the CRA to the SPS, each time a new decision is made. There is no suggestion that this reasonable expectation is not met in this case. For example, there is no evidence before the Tribunal that the amount received by the Applicant in compensation for personal injuries was calculated on a shorter life expectancy than that contended for by Ms Stephenson in her report, and no suggestion that the Applicant is not presently able to contribute to her reasonable and necessary supports by having resort to the compensation she has received. Each time the CRA is applied to a plan, the CRA already applied to the Applicant’s previous plan is taken into account, so that the funded supports are reduced by the total CRA, and no more, over the period of time arrived at by the proper application of an actuarial process. It is not an exact science. If the Applicant’s actual life span differs from her estimated life span, it may not be possible to achieve with precision the aim of ensuring that the NDIS has not duplicated compensable payments. However, the application of the CRA arrived at using the actuarial principles above, including the estimated life expectancy of the Applicant, provide an example of Chapter 5 of the NDIS Act and the Compensation Rules operating as intended.
The Applicant’s submission has been couched in terms of a request to disregard part of the Applicant’s compensation. However, other than the two amounts of legal expenses discussed above, there is no suggestion in the material before the Tribunal that, for example, part of her compensation is no longer available to her, having been exhausted by unusual expenses. The substance of the request is to invite the Tribunal to arrive at a decision that allows the Applicant to spread out, over a longer period of time than that provided for in the CRA calculation, the contributions to her funded supports that the statutory scheme contemplates she should make. However, the Applicant has not identified the part of the compensation that it is proper to disregard or treat as not having been received. Instead, the Applicant submitted that the correct outcome was to disregard whatever portion of the Applicant’s compensation would lead to an outcome where the CRA applied to this plan would be reduced to the amount that would be applied to her plan using the longer life expectancy estimate. If the CRA was reduced by, say, $24,000 for a year-long period of the Applicant’s plan, using the proposed higher life expectancy, the effect of this would be to reduce the total CRA such that not all of the compensation received by the Applicant would be taken into account. This would not have the effect of spreading out, or amortising, the CRA across a greater period because, once disregarded, no mechanism exists to add that figure back in later in the Applicant’s life. The Tribunal regards the process by which the Applicant seeks to quantify this aspect of her request as misconceived.
In any event, in order to disregard any part of the CRA, the Tribunal would have to be satisfied that the Applicant’s circumstances were special, that is, that they were different to the run of ordinary cases.[36] In ordinary cases, the CRA is applied in accordance with the actuarial calculations. The application of the CRA cannot, alone, amount to a special circumstance. It is an ordinary and anticipated circumstance for a participant such as the Applicant who has been compensated for her injury.
[36] Beadle and Director-General of Social Security (1984) AATA 176, see also, on appeal to the FCFCA, at (1985) 60 ALR 225.
There is no evidence to suggest any financial hardship on the part of the Applicant or that she has not retained funds from her settlement which can supplement the funded supports in order that she has access to all reasonable and necessary supports. On the contrary, the evidence indicates that her decision-making is managed by her guardian, and her financial decisions are managed by an appointed administrator, and that the Applicant has been able to access substantial financial resources at times, including almost $100,000 to fund the legal expenses incurred in ensuring those appointments were made. There is no suggestion that the Applicant, and those who assist her, cannot arrange her financial affairs to meet the shortfall in funded supports created by the application of the CRA to her funded supports during the course of the reviewable decision or, indeed, over the coming years as a participant in the scheme.
Should the Applicant enjoy a long life, and once the CRA has been fully applied to her plans, she will eventually have no such further reductions to her funded supports later in her life. The Tribunal is not satisfied that the application of a shorter estimated life expectancy than that contended for by the Applicant should lead to a finding that it would be appropriate, in the special circumstances of this case, to disregard any part of her compensation under Compensation Rule 3.10.
The Tribunal notes that it is not entirely clear whether and, if so, from when the calculation of the CRA applied in the decision under review includes the subtraction of the amount for the costs of $41,317.40 incurred in obtaining a statutory will. For the reasons expressed above, that amount should be so subtracted. Also, for the reasons set out above, the recalculation should have been given effect from the date of the original decision, being 11 December 2020. The Tribunal will therefore set aside the decision under review and remit this matter to the Respondent for reconsideration with the direction that the Compensation Reduction amount be re-calculated on that basis from the date of the original decision.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Senior Member K Buxton
.......[sgn].................................................................
Associate
Dated: 28 August 2023
Date(s) of hearing: 2 August 2023 Date final submissions received: 17 August 2023 Counsel for the Applicant: Ben McMillan Solicitors for the Applicant: Attwood Marshall Lawyers Counsel for the Respondent: Joel Tito Solicitors for the Respondent: Australian Government Solicitor
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