Hadley and Secretary, Department of Social Services (Social services second review)

[2016] AATA 637

Hadley and Secretary, Department of Social Services (Social services second review) [2016] AATA 637 (25 August 2016)

Division	GENERAL DIVISION
File Number(s)	2015/5563
Re	Natasha Hadley
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

Decision

Tribunal	Mr S. Webb, Member
Date	25 August 2016
Place	Sydney

The decision under review is varied only insofar as the lump sum preclusion period is to commence on 1 September 2013 and to end on 7 March 2015. Other parts of the decision are affirmed.

....................[sgd]... .................................................

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY – carer payment – motor vehicle accident – lump sum compensation – compensation part of lump sum – lump sum preclusion period – compensation affected payments – recovery – discretion – no special circumstances – decision varied

LEGISLATION

Social Security Act 1991, s 17, 1168, 1169, 1184, 1184A, 1184G, 1184K

REASONS FOR DECISION

Mr S. Webb, Member

25 August 2016

1. Natasha Hadley was injured in a motor vehicle accident. She claimed and was awarded compensation. She had been receiving Carer Payment for many years. Centrelink decided to impose a lump sum preclusion period and to recover an amount of Carer Payment. The decision has been affirmed by successive decision makers. Ms Hadley does not think that this is fair or just in the circumstances. She applied for review.

2. During the hearing it became apparent that all relevant documents held by Centrelink addressing Ms Hadley’s declared earnings in employment and incapacity for work in 2013 may not have been provided to the Tribunal. I issued orders for this to be done and for any related submissions to be made by each party. Documents were filed for the Secretary, but Ms Hadley did not provide any further documents, despite being provided with additional time to do so. I will proceed to decide the matter on the present evidence.

   Issues

3. The issues to be decided are –

   (a)Does a lump sum preclusion period apply and, if so, the start date and duration of the preclusion period?

   (b)Is any amount of the lump sum compensation recoverable by Centrelink and, if so, what is the recoverable amount?

   (c)Are there special circumstances that make it appropriate to exercise discretion and treat any part of the compensation as not having been made?

   Brief facts

4. Ms Hadley has two children living with her in a rented house. Her marriage to the father of the children broke down. One child requires care, in respect of which she has received Carer Payment for many years.

5. Ms Hadley works as a Loss Prevention Officer on a part time basis. She has been engaged in this employment for several years and, relevantly, has worked in Sydney from July 2013.

6. On 30 August 2013, while on her way to work, Ms Hadley was injured in a motor vehicle accident.[1] She sustained injuries to her neck. She struggles with ongoing pain and she may yet require further surgical treatment.

   [1] T5 folio 27.

7. She claimed compensation from NRMA Insurance Ltd, insurer for the other driver.

8. On 21 April 2015, she settled her claim for compensation by agreement through her solicitor, Gaye Ranson of Law Partners Compensation Lawyers.[2] Settlement was in the amount of $150,000, inclusive of legal costs.

   [2] T4 folios 23-24; T5 folios 29-30.

9. On 23 April 2015, Ms Ranson informed the Department of Human Services of the settlement and requested a release notice.[3]

   [3] T4 folio 22.

10. On 27 April 2015, NRMA Insurance notified Centrelink of the settlement and requested clearance.[4]

    [4] T5.

11. On 5 May 2015, Centrelink determined that a lump sum preclusion period applied from 30 August 2013 to 5 March 2015 and that an amount of $30,819.47 was to be repaid.[5] On the same day, Centrelink issued a Compensation Recovery Notice to NRMA Insurance under s 1184 of the Social Security Act 1991 (the Act),[6] and informed Ms Ranson.[7]

    [5] T8.

    [6] T7.

    [7] T6.

12. Ms Hadley requested review by an Authorised Review Officer (ARO).

13. On 3 June 2015, the ARO decided to affirm the preclusion period and recovery decision.[8]

    [8] T10 and T11.

14. The decision was affirmed by Social Security and Child Support Division of this Tribunal.[9]

    [9] T2.

15. Ms Hadley is not satisfied and she has applied for further review.

    Lump sum preclusion period

16. The terms of settlement between Ms Hadley and NRMA Insurance do not apportion a specific amount or proportion of the $150,000 lump sum to lost earnings or loss of capacity to earn. Nevertheless, it appears that the settlement included a component, albeit unquantified, for economic loss.

17. That being so, a lump sum preclusion period applies under s 1170 of the Act, relevantly –

    (3)  If neither of subsections (1) and (2) applies, the lump sum preclusion period is the period that:

    (a)  begins on the day on which the loss of earnings or loss of capacity to earn began; and

    (b)  ends at the end of the number of weeks worked out under subsections (4) and (5).

    (4)  The number of weeks in the lump sum preclusion period in relation to a person is the number worked out using the formula:

    (5)  If the number worked out under subsection (4) is not a whole number, the number is to be rounded down to the nearest whole number.

18. As can be seen, the preclusion period starts on the first day on which Ms Hadley experienced ‘the’ loss of earning or loss of capacity to earn. This is a reference to ‘lost earnings or lost capacity to earn resulting from personal injury’ in the definition of ‘compensation’ in s 17(2). The legislation does not require a minimum threshold of loss – any loss of earnings or any loss of capacity to earn as a result of the injury to which the compensation relates is sufficient to satisfy this test.

    When did Ms Hadley first lose earnings or capacity to earn as a result of the injuries for which she was paid compensation?

19. Ms Hadley’s evidence is that after the accident she proceeded to her workplace. She worked her usual hours on that day and the following day. But on the next day, her neck was too painful and she sought medical treatment from Dr Soh, a general practitioner. By her account, Dr Soh decided that she was unfit for work as result of a whiplash injury and issued a medical certificate covering her for two days off work. It is unfortunate there is no evidence from Dr Soh in the present materials – a copy of the medical certificate would remove questions about its contents and when it was issued. Nonetheless, I accept Ms Hadley’s unchallenged evidence on this point.

20. Ms Hadley’s evidence in chief is that thereafter, she returned to work, but on reduced hours. She explained that she was working about 21 to 25 hours per week in the weeks before the injury, but her hours fluctuated somewhat. She estimated that thereafter she worked roughly 12 hours per week, although, as previously, her hours fluctuated week by week. This continued for several months, but she ceased work because of the injury in or about 16 May 2014. She was unable to return to work until in or about November 2015.

21. Ms Hadley was closely examined on these points. Centrelink records of her declared earnings[10] were put to her in cross-examination. Ms Hadley accepted that these records “are about right”.

    [10] T15 folio 84.

22. It is difficult to know what to make of these records. Quite clearly, Ms Hadley’s earnings in employment fluctuated, fortnight by fortnight. In the fortnight ending on 9 August 2013, she earned $496. The following fortnight ending on 23 August 2013, she earned $346. For the subsequent fortnights ending on 6 September 2013, 20 September 2013 and 4 October 2013, she earned $670, $356 and $694 respectively. Clearly enough, her fortnightly earnings varied by a substantial amount from one pay period to the next. These records do not reveal a reduction in her earned income in the days following her motor vehicle accident on 30 August 2013 – in that fortnight she earned $670, whereas in the previous fortnight she earned $356. As can be seen, she earned a greater amount in the fortnight in which the motor vehicle accident occurred than in the previous fortnight.

23. This notwithstanding, the amount she earned each fortnight was dependent upon the number of hours and days she worked in that period. I have accepted Ms Hadley’s evidence that Dr Soh certified that she was unfit for work for two days because of neck symptoms caused by the motor vehicle accident. If that is correct, it may be accepted that she might have lost earnings on those days. But the variation in Ms Hadley’s periodic earnings is such that it is not possible, on these records alone, to draw any firm conclusion about whether she experienced any loss of earnings in the fortnight ending on 6 September 2013.

24. This notwithstanding, if it is correct that Ms Hadley was certified unfit for work on 1 and 2 September 2013 as a result of her neck injury, she would have had a loss of capacity to earn on those days. For a person working variable hours and days, lost capacity on two days may not be immediately apparent in earnings records for that period – the loss of capacity may have occurred on days when the person was not scheduled to work, or the person may simply have adjusted their work hours and days to avoid a loss of earnings in the period. It is probable that this is such a case.

25. Under s 1170(3)(a), the lump sum preclusion period “begins on the day on which the loss of earnings or loss of capacity to earn began”.

26. I am satisfied that Ms Hadley lost earnings and lost capacity to earn at various times after the motor vehicle accident in which she sustained the injuries for which she was compensated. The day on which loss of this kind began is the first day on which she was certified unfit to work by Dr Soh as a result of the whiplash injury to her neck, two days after the date of the motor vehicle accident on 1 September 2013.

27. It follows that the start day of the lump sum preclusion period is 1 September 2013. This is so, even though Ms Hadley subsequently continued in employment, earning variable amounts, until on or about 16 May 2014.

28. The term ‘compensation part of lump sum’ is explained in s 17(3). The compensation part of Ms Hadley’s lump sum is 50% of the total amount, $75,000.

29. The term ‘income cut-out amount’ is explained in s 17(8). The applicable income cut-out amount is $942.20 per week.

30. Applying the formula in s 1170(3), the number of weeks in the lump sum preclusion period is 79.6. This is rounded to 79 weeks.

31. It follows that the lump sum preclusion period runs for 79 weeks from 1 September 2013, ending on 7 March 2015.

    Recoverable amount

32. Under s 1169, a ‘compensation affected payment’ is not payable to a person while a lump sum preclusion period is in force. This is so ‘regardless of whether the lump sum compensation payment was received before or after the person received or claimed the compensation affected payment’: s 1168.

33. Ms Hadley was paid Carer Payment throughout the entire lump sum preclusion period. In these circumstances, where Ms Hadley received compensation affected payments during a lump sum preclusion period, under s 1184, the Secretary may recover from NRMA Insurance, Ms Hadley’s compensation payer, an amount specified in a notice under s 1184A –

    (1)  If a person receives compensation affected payments in relation to a day or days in a lump sum preclusion period, the recoverable amount under this section is equal to the smallest of the following amounts:

    (a)  the sum of all compensation affected payments made to the person that relate to a day or days in a lump sum preclusion period;

    (b)  the compensation part of the lump sum payment;

    (c) …

34. The amount specified in the Secretary’s s 1184 notice on 5 May 2015 is $30,918.47.[11] This is likely to be correct even though the lump sum preclusion period commenced on 1 September 2013 and not on 30 August 2013, as previously determined. The variation of 2 days is unlikely to affect the amount of carer Payment Ms Hadley received – I will proceed on the basis that it does not.

    [11] T7 folio 37.

35. As the total amount of Carer Payment Ms Hadley received during the lump sum preclusion period ($30,819.47) is less than the compensation part of the lump sum $75,000), the recoverable amount is $30,819.47. This amount is a debt due to the Commonwealth under s 1184G. I note in passing that there is a very slight discrepancy in the overpayment amount calculated in Centrelink’s documents – an overpayment of $30,819.69 is shown in the document at T12 folio 77. The 22 cent discrepancy is not explained. I will proceed on the basis that the amount of $30,819.47, as originally notified and determined, is correct.

    Discretion to treat any part of the compensation as not having been made

36. The discretion to treat any part of the lump sum compensation as not having been made is enlivened if special circumstances exist that render it appropriate to do so. The term ‘special circumstances’ is not defined in the legislation. As has been said in so many cases, the term can readily be understood to mean circumstances that are unusual, uncommon or exception, that are out of the usual course, or that result in unintended consequences, injustice or unfairness.

37. Ms Hadley’s circumstances are that she is raising her children as a sole parent. She provides care to her son, who has a disability. She relies on Carer Payment. Prior to the motor vehicle accident, she supplemented her income with earnings in part-time employment. The effects of the injuries she sustained have prevented her from undertaking paid employment to the same extent. As a result, she is in straitened financial circumstances.

38. Ms Hadley’s evidence is that she did not receive $150,000 in compensation. A substantial proportion, about $30,000, was taken in legal costs.

39. On Ms Hadley’s evidence, she was told by her lawyers that Centrelink would recover only $7,000 to $7,500 from the lump sum. She was surprised and devastated to discover that the actual recovery amount was $30,819.47. This far exceeded her expectation.

40. She explained that after these amounts were deducted, and the Medicare reimbursement was included, she paid a number of accumulated bills. By her account, this left her with a sum of approximately $72,000.

41. Her evidence is that, after the accident, she had difficulty doing household chores and gardening jobs. Her former husband offered to assist. She agreed, somewhat tentatively it would seem, to a form of reconciliation with her former husband. Under this arrangement she provided him with approximately $50,000 as a deposit for a house in which they would reside in Forster, New South Wales. Unfortunately, the arrangement did not hold good.  Ms Hadley gave evidence that her former husband put the home in his name, alone, and once the purchase had been made informed her that he no longer wanted to reconcile with her. Ms Hadley is presently exploring her legal recovery options.

42. Ms Hadley told me that she provided her adult son with approximately $14,000 - $10,000 as a loan to payout his debts, and $4,000 to purchase items for his car as a ‘thank you’ gift in recognition of his assistance during a difficult period.

43. Ms Hadley explained that all of the compensation money is now gone. She told me that she is up to date with her bills and she makes ends meet on a week to week basis, but she has no spare money to put aside – she cannot get ahead.

44. She is concerned that her neck injury will have a life-long effect. In particular she is worried that it will result in loss of her capability to earn in her present occupation, which can be quite physical in nature.

45. She told me that she struggles to bear the cost of medical treatment for her injuries and that she may require further surgical treatment – she experiences chronic pain. Dr Campbell, her treating general practitioner, described this as “neck and upper thoracic pain” and reported that Ms Hadley is waiting to see a pain specialist.[12]

    [12] Exhibit 2.

46. Ms Hadley said that she was prescribed high level doses of Endone, an opioid medication. This, she says, badly affected her brain, such that now she has difficulty concentrating – she loses the thread of conversations and she has difficulty remembering and learning new things. This was apparent during the hearing.

47. She told me that despite her younger son having a developmental disability and requiring special care, the health of her children is good.

48. Considering these matters, I am not persuaded that taken separately or in combination these circumstances are within the meaning of ‘special circumstances’ for the purposes of s 1184K.

49. I accept the Secretary’s submission that the application of an incorrect commencement date for the lump sum preclusion period is not, itself, a special circumstance that would justify exercise of discretion to treat all or part of the compensation payment Ms Hadley received as not having been made. This is because the error did not have a significant effect on the amount Ms Hadley was overpaid.

50. Ms Hadley is in a tight but manageable financial position. She may yet be able to recover monies from her ex-husband and her eldest son. Even if she cannot, or does not, while her finances are no doubt tight, they are not so straitened or dire, and Ms Hadley is not so impecunious, that these circumstances can properly be considered as special. She, like so many others with low incomes who rely on social security payments, cannot put money aside to get ahead, or to afford non-essential items; but that is not unusual. I accept that she has to manage her expenses carefully, juggling her work hours and Carer Payments to ensure that she can make ends meet. That she manages is a credit to her tenacity, but it does not mean that her case is out of the ordinary.

51. Providing care to a child that requires it, too, is not in any way unusual for people in receipt of Carer Payment; that is what the Payment is for.

52. The health of Ms Hadley’s children is good, even though her own health is affected by the neck injury and resulting chronic pain she endures. Injury and resulting health issues are common features of cases under the compensation recovery provisions of the Act. Ms Hadley’s case in not unusual in that regard. I accept that she has experienced adverse cognitive effects of high level doses of opioid medication prescribed as treatment for her chronic neck and thoracic pain. On the present evidence, the degree to which this affects her judgement or her capacity to earn is not established; nor is it is clear whether these effects may endure, or resolve with time or further treatment.

53. It is possible that she entered into the arrangement with her ex-husband at a time when her judgement was impaired, but this is not established on the present materials. It appears that Ms Hadley is conducting her affairs in that matter in a reasonable and cogent manner. Certainly, that is the manner in which she engaged during the hearing, despite technical difficulties.

54. The surprise she experienced on learning that the amount to be recovered from her compensation lump sum far exceeded her expectation is a matter best addressed to her former lawyer. As has been said in previous cases on issues of this kind, what is given in advice by a lawyer to a client, and any error or deficiency in such professional advice, remains a matter between the client and the lawyer – until those matters are dealt with, the remedy is not through income support payments from the public purse.

55. The general principle, consistent with the purposes of the legislation, is that a person should not receive income support payments from two sources at the same time. The compensation recovery provisions are structured in that way.

56. Nonetheless, the scheme of the Act also provides discretion to respond to special circumstances that may arise in the wide variety of cases under the compensation recovery provision of the Act. Issues of fairness arise as one factor for consideration. Ms Hadley says that imposing a preclusion period and recovering a large sum from her compensation lump sum is not fair to her in the circumstances. I am sure that from her perspective it may appear so. But I must have regard to fairness in a broader frame, involving other cases of similar kind.

1. On balance, I do not think that Ms Hadley’s case is one involving special circumstances that render it appropriate to treat any part of the lump sum compensation she received as not being made for the purposes of s 1184K of the Act.

   Conclusion and decision

2. It is not appropriate to exercise discretion to reduce the compensation amount Ms Hadley received in settlement of her claim against NRMA Insurance.

3. A lump sum preclusion period applies from 1 September 2013 to 7 March 2015. Recovery of $30,918.47 in compensation affected payments was correct.

4. The decision under review is varied only insofar as the lump sum preclusion period is to commence on 1 September 2013 and to end on 7 March 2015. Other parts of the decision are affirmed.

I certify that the preceding 60 (sixty) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

...........................[sgd].............................................

Associate

Dated 25 August 2016

Date(s) of hearing	18 May 2016
Date final submissions received	25 July 2016
Applicant	In person (by telephone)
Solicitors for the Respondent	Department of Human Services