Farrugia and Secretary, Department of Employment and Workplace Relations
[2006] AATA 1002
•24 November 2006
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DECISION AND REASONS FOR DECISION [2006] AATA 1002
ADMINISTRATIVE APPEALS TRIBUNAL № V2006/322
GENERAL ADMINISTRATIVE DIVISION
Re:SAM FARRUGIA
Applicant
And:secretary,
department of employment and workplace relations
Respondent
DECISION
Tribunal: Mr Egon Fice, Member
Date: 24 November, 2006
Place: Melbourne
Decision: The Tribunal affirms the decision under review.
(sgd) Mr Egon Fice
Member
SOCIAL SECURITY – compensation-affected payments – recovery of overpayment from insurer
Social Security Act 1991 s 1173(1), s 1174(1), s 1182(1), s 1184(2), s 1184K
REASONS FOR DECISION
24 November 2006 Mr Egon Fice, Member
Mr Farrugia and his wife were receiving various social security payments from 1995. In 1999 Mr Farrugia suffered an injury at work and made a compensation claim. His claim was accepted by QBE Mercantile Mutual Workers’ Compensation (QBE) and between 1999 and 2003 Mr Farrugia became entitled to various compensation payments from QBE.
QBE informed Centrelink, which acts as the services delivery agency for the Secretary to the Department of Employment and Workplace Relations (the Secretary), of the various rates of compensation payments to which Mr Farrugia became entitled. These rates varied throughout the relevant period. In accordance with the Social Security Act 1991 (the Act), applying the principle that persons who are unable to work due to a compensable injury are not entitled to receive income support from social security and compensation for the same period, Centrelink levied a charge against QBE seeking recovery of the social security payments made to Mr Farrugia during the various periods when he was also receiving workers’ compensation from QBE.
Mr Farrugia disputes the charges which have been levied against QBE. His application for review of the decision by a Centrelink Authorised Review Officer (ARO) was unsuccessful. The ARO’s decision was affirmed by the Social Security Appeals Tribunal (SSAT) on 3 April 2006.
As I understood Mr Farrugia’s application, the only issue for the Tribunal is whether the charges levied against QBE are correct.
Relevant Facts
Between June 1999 and February 2005 (the relevant period) Mr and Mrs Farrugia received newstart allowance, partner allowance and parenting payment partnered.
Mr Farrugia suffered an injury at his workplace on 1 April 1999 and he made an application to QBE for workers’ compensation payments. Centrelink was advised by QBE on 11 November 1999 that Mr Farrugia would be paid compensation backdated to 1 June 1999. The rate of payment was to be $513.00 per week. On the same day, Centrelink wrote to QBE notifying the insurer that under s 1174(2) of the Act, the insurer was liable, upon receiving notice, to pay to the Commonwealth the sum $7,044.19. This is the sum of social security payments made to Mr Farrugia ($3,654.84) and Mrs Farrugia ($3,389.35) between 1 June 1999 and 11 November 1999.
On 21 December 1999 QBE paid Centrelink the sum of $7,044.19.
On 18 July 2000 Mr Farrugia contacted Centrelink and informed the relevant officer that QBE insurance compensation payments had ceased on 22 June 2000. In response to that advice, social security payments were resumed to Mr Farrugia and his wife, with effect from 29 June 2000, allowing for the normal waiting period of one week.
On 9 July 2001 Centrelink was advised that weekly compensation payments to Mr Farrugia were to be re-instated as from 18 November 2000. The rate that he was to be paid, from that date to 1 June 2001, was $405.00 per week, later increasing to $413.00 per week. Following that advice, Centrelink raised a charge of $10,542.80 against those payments, for the period between 18 November 2000 and 4 July 2001, being the sum of social security payments received by Mr Farrugia and his wife during that period. QBE was sent a recovery notice under s 1174 of the Act demanding repayment of $10,542.80.
On 17 July 2001 Centrelink received further advice from QBE that it intended to pay Mr Farrugia compensation from 21 June 2000 to 17 November 2000, at the rate of $405.00 per week. Centrelink raised a further charge for $6,388.94 being social security payments received by Mr and Mrs Farrugia in that period.
On 14 August 2001 Centrelink received two payments from QBE totalling $9,887.55. As at that date, QBE was required to refund a total $16,931.74 to Centrelink and therefore, following the 14 August 2001 payment, the balance outstanding from QBE was $7,044.19. Although this sum is precisely the same amount as the first charge raised, it has nothing whatsoever to do with the first charge which had been repaid in December 1999.
On 29 January 2002 Mr Farrugia notified Centrelink that his QBE compensation payments would cease from 10 February 2002. This was confirmed by an officer from QBE who said that Mr Farrugia’s payments would cease on 10 February 2002 because he had refused to participate in a rehabilitation and return to work program. Centrelink recommenced paying Mr and Mrs Farrugia social security payments from 11 February 2002.
On 19 March 2002 QBE wrote to Centrelink advising that it was required to re-instate workcover benefits payable to Mr Farrugia from 11 February 2002, at a rate of $416.00 per week. The compensation payments were to be made between 11 February 2002 and 12 April 2002 and Centrelink calculated that in that period, Mr Farrugia and his wife would receive a total of $2,867.17 in social security payments. On 14 May 2002, Centrelink raised a charge of $2,867.17 against QBE for social security payments made to Mr and Mrs Farrugia during that period.
Between 7 June 2002 and 31 January 2002 QBE paid Centrelink a further $3,500.00 by way of fortnightly instalments garnished from Mr Farrugia’s compensation payments.
On 21 January 2003 Mr Farrugia again contacted a Centrelink officer and complained about the recovery of social security payments being garnisheed from his compensation entitlements.
On 7 January 2003 QBE informed Mr Farrugia that his weekly compensation payments would be terminated on 7 February 2003. Mr Farrugia notified Centrelink of this on 23 January 2003. QBE subsequently confirmed that compensation was paid until 6 February 2003 after which it ceased. Mr and Mrs Farrugia were therefore granted social security payments commencing 7 February 2003. Those payments continued until 9 May 2003 during which time Mr and Mrs Farrugia were paid $4,438.22.
On 1 April 2003 Mr Farrugia notified Centrelink that he had received a lump sum settlement of $54,750.00 from QBE. Centrelink assessed this amount under the income and assets test and did not raise a compensation charge.
On 9 November 2004 QBE notified Centrelink that weekly compensation payments were paid to Mr Farrugia between 7 February 2003 and 9 May 2003. A compensation charge was raised and QBE notified of the amount, being $4,438.22. On 25 November 2004, QBE paid to Centrelink $4,518.22.
As at 9 May 2003, the total of the charges raised against Mr Farrugia’s compensation payments, being the amounts received by him and his wife between June 1999 and that date, was $31,281.32. Of that sum, QBE had paid $24,949.96, leaving a balance owing to Centrelink of $6,331.36. That sum was repaid to Centrelink by QBE on 22 February 2006.
Legislative Scheme
Section 1173(1) and s 1174(1) of the Act apply to persons and to partners of persons who receive periodic compensation payments. In essence, social security payments which are made to an applicant and his partner during a period where the applicant receives compensation under a scheme of insurance are regarded as compensation-affected payments. Section 1173 and s 1174 provide that where a person receives a compensation-affected payment, the rate of that person’s compensation affected payment is reduced in accordance with those sections. An applicant’s daily rate of compensation affected payment is reduced by the amount of the person’s daily rate of periodic compensation. As for that person’s partner, where he or she is also receiving a compensation-affected payment, and if there is any excess between the amount of the compensation-affected payment and the periodic compensation payable to the applicant, that sum is to be treated as ordinary income of the applicant’s partner for the purpose of calculating the amount of compensation-affected payment to which that partner is entitled. Where that excess exceeds the amount paid to the partner, the effect is to reduce the partner’s entitlement to social security payment to zero.
The principle which is applied by virtue of s 1173 and s 1174 of the Act is that persons who are unable to work because they have suffered a compensable injury are precluded from receiving income support from social security and an insurance compensation system for the same period.
Section 1182(1) of the Act provides that where a person makes a claim for compensation and also makes a claim for a social security payment (i.e. compensation-affected payment) in respect of the period in which the person receives periodic compensation payments, the Secretary may give written notice to the person liable to make the compensation payment (i.e. QBE) that the Secretary may wish to recover an amount from that party. Where such notice is given to an insurer, and on or after receiving the notice, the insurer becomes liable to indemnify the potential compensation payer, the insurer must give written notice to the Secretary of the liability within seven days of becoming liable or receiving the notice, whichever happens later. Upon receiving a notice under s 1184(2) of the Act, the insurer is liable to pay to the Commonwealth the amount specified in the notice which is referred to in the Act as the recoverable amount.
Section 1184A of the Act provides that the sum of the compensation-affected payments made to Mr and Mrs Farrugia are recoverable from an insurer, in this case QBE.
The Recoverable Amount
Centrelink’s decision to recover the social security payments received by Mr and Mrs Farrugia for the period during which they also received compensation payments from QBE was clearly correct. Recovery notices were provided to QBE which gave rise to a statutory liability in the insurer to pay to the Commonwealth the amount specified in the notices.
The only question raised by Mr Farrugia is whether the total amount sought to be recovered, being $31,281.32, was correct. Having examined the evidence provided by the Secretary regarding the social security payments made by Centrelink during the relevant periods and the compensation payments received by Mr Farrugia from QBE, I am of the opinion that the calculations for each relevant period are correct.
Although Mr Farrugia has made several complaints about the way this matter has been handled by Centrelink, his principal complaint seems to be that the group certificates provided to him by Centrelink were incorrect, particularly for the 2003 financial year. It seems to me that the problem with incorrect group certificates has arisen because of QBE’s delay in making full payment of the charge amount for each period. Mr Farrugia seems to have assumed that QBE repaid the charge amount to Centrelink almost immediately upon a notice having been issued. However, Centrelink’s documents clearly disclose that this was not the case. Following the issue of the fifth charge notice, for the period between 7 February 2003 and 9 May 2003, the total amount charged to QBE was $31,281.32. However, QBE had, at the end of that period, only repaid $16,931.74 leaving an unpaid balance of $14,349.58. Therefore, Mr Farrugia’s group certificate issued for that period would necessarily reflect that he had received substantially more by way of social security payments and compensation payments than he understood to be the case.
The simple explanation for Mr Farrugia’s confusion appears to be that he had, in fact, received more than the compensation payments because the social security payments had not been recovered from QBE at the end of the 2003 financial year. Centrelink received $4,518.22 on 25 November 2004 and a further $3,500.00 was recovered by way of instalments garnished from Mr Farrugia’s weekly compensation payments. The balance of $6,331.36 was repaid by QBE on 22 February 2006. It is clear to me that Mr Farrugia’s group certificates for the financial years following 2003 would indicate higher levels of income than Mr Farrugia anticipated. The documents indicate that adjustments were subsequently made to the group certificates to take account of the delayed payments.
Special Circumstances
Section 1184K of the Act provides that the Secretary may, if he thinks it is appropriate to do so, disregard the whole or part of a compensation payment. However, Mr Farrugia made no submissions regarding the possibility of circumstances which might give rise to the Secretary exercising the discretion provided for in this section. According to the Secretary, even if Mr Farrugia had sought dispensation due to special circumstances, it ought not be exercised given that he has previously given evidence to the SSAT that he has investments valued at over $150,000.00.
As there was no evidence before me regarding special circumstances, and Mr Farrugia made no submissions regarding any dispensation, there is no basis for me to make a decision either way regarding this point.
CONCLUSION
Despite Mr Farrugia’s concerns about the debt recovery process from QBE where compensation payments were made to him during periods where he and his wife also received social security payments, I am satisfied from the Centrelink documents that the amounts recovered from QBE are correct and in accordance with the Act. It follows that the decision made by the SSAT on 3 April 2006 must be affirmed.
I certify that the thirty [30] preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr Egon Fice, Member
Signed: Ursula Noyé
Clerk
Dates of Hearing 23 October 2006
Date of Decision 24 November 2006
Advocate for the Applicant Self-represented
Advocate for the Respondent Ms K. Paul, Centrelink Legal Services
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