McNay and Secretary, Department of Family and Community Services

[2004] AATA 1317

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1317

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/772

General Administrative Division		)
Re		Jonathan McNay

Applicant

And Secretary, Department of Family and Community Services

Respondent

DECISION

Tribunal Ms Narelle Bell, Senior Member

Date10 December 2004

PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that so much of the compensation lump sum paid to Mr McNay is to be disregarded as to reduce the preclusion period to the extent that the amount recovered by Centrelink from his workers compensation lump sum settlement is, in turn, reduced by $5,000.  

........................................

Ms N Bell,
  Senior Member

SOCIAL SECURITY – Compensation for Motor Accident – Preclusion Period Imposed – Money Recovered by Centrelink due to Compensation Paid – Whether Amount Recovered Should be Refunded in Part or Whole – Special Circumstances – Disability Support Pension Paid as Result of Leukaemia not Motor Accident Injury.

Social Security Act 1991

Secretary, Department of Social Security v Smith (1991) 30 FCR 56

Secretary, Department of Social Security v Thompson (1994) 53 FCR 580

REASONS FOR DECISION

10 December 2004 Ms N Bell, Senior Member 

1.      Mr McNay was injured in a motor vehicle accident in September 2000.  He suffered a severe neck injury.  He was unable to work for some five months and received some workers compensation payments.  In October 2001 Mr McNay was diagnosed with acute myeloid leukaemia and was granted disability support pension from November 2001.

2.      Later in October 2003, Mr McNay’s claim for compensation in respect of his motor vehicle accident was settled for $222,500.  From this amount a worker’s compensation payback was made in the sum of $44,982.43.  In addition, on 25 November 2003 the Respondent calculated a preclusion period from 22 February 2001 to 14 April 2004, cancelled his disability support pension and recovered an amount of $15,345.42 from the insurer.

3.      Mr McNay submits that the charge amount of $15,345.42 should be made available to him on the basis that this amount was compensation for an injury not related to the condition that qualified him to receive disability support pension.  He also submitted that the amount of compensation he had received was less than it would have been had he not developed leukaemia because this had the effect, in the insurer’s eyes, of shortening his life expectancy and consequently his future economic loss.

4.      I am satisfied that the preclusion period calculated by the respondent is correct (after it was recalculated and then affirmed by the Authorised Review Officer).

5. The combined effect of sections 1165 and 17(3) of the Social Security Act 1991 is that the amount received by Mr McNay after payback of periodic compensation payments ($208,143) is the compensation lump sum received by him.  50% of that amount ($104,071) is the compensation part of the lump sum.  The preclusion period is calculated by dividing the compensation part of the lump sum by the level of income at which no social security payment would be payable (the income cut out amount).  At the relevant time, the income cut out amount was $633.25.  This yields a preclusion period of 164 weeks.  That was the length of the preclusion period calculated by the Respondent.  The preclusion period begins on the next payment day after the last periodic compensation payment received by the Applicant, that is, 22 February 2001.

6.      Section 1160 of the Act provides that these provisions apply regardless of whether there is a connection between the circumstances that gave rise to the Centrelink payment for which Mr McNay qualified, and the circumstances that gave rise to his compensation settlement.

7.      There remains the consideration of whether the discretion in section 1184K of the Act, arising out of any special circumstances of the case, should be exercised to disregard some of Mr McNay’s compensation payment and so shorten the preclusion period.

8.      I note at the outset that section 1184K(2) of the Act provides that the absence of a connection between the circumstances giving rise to the Centrelink payment for which Mr McNay qualified and the circumstances giving rise to his compensation settlement does not alone constitute special circumstances for the purposes of the exercise of the discretion.

9.      I accept Mr McNay’s evidence of his current circumstances.  I note, however, that he is, financially, in a better position than most people who qualify to receive a Centrelink payment.  He has an investment property in New Zealand, with a current nett value of approximately $220,000.  He has also contributed $100,000 of his compensation settlement monies to the purchase of land and construction of a house with his parents and sister in New Zealand.  I also note his evidence that, of his $222,500 settlement monies he received only about $125,000 in his hand after all deductions and costs.  He said he has approximately $9,000 of his settlement monies left.  His only other asset is his car.

10.     Mr McNay last worked in November 2003 as a sales representative.  He had been in this position for two months when he had to resign because the medication he takes in connection with his leukaemia made his femur deteriorate and he had to have a hip replacement in April 2004.  Prior to this he had not worked since September 2001 when he resigned in order to have treatment for his leukaemia.  This treatment included a stem cell transplant in April or May 2002 which has, in turn given rise to Graft versus Host disease and its attendant immune system complications.  He said that he hopes to start work again next year but is conscious that his working life may be cut short with the likelihood of further hip deterioration and other medical problems.  He also said he has had problems with his liver and may develop problems with his kidneys.

11.      Mr McNay is able to purchase medication at the assisted rate, with a few expensive exceptions, and last year exceeded the pharmaceuticals safety net.  He also has a massage on an occasional basis to relieve the pain in his neck.  He meets the cost of this himself.

12.     The Act is clear on the way in which the relationship between the injury for which compensation is received and the condition that qualifies a person to receive disability support pension should be treated.  The lack of connection between those two cannot be treated as a special circumstance on its own.  However, I consider that there are other factors that, with this, make Mr McNay’s circumstances special.

13.     While there is nothing inherently unusual or exceptional in a person who is receiving disability support pension suffering ill health, the convergence of events, injury and disease in Mr McNay’s case is out of the ordinary and the constellation of conditions and symptoms suffered by him is extreme.  I note that he has suffered, in less than 4 years, a fracture of the cervical spine, acute myeloid leukaemia and the treatment of that, including a stem cell transplant.  That, in turn, gave rise to Graft versus Host disease and required treatment including medication that produced physical deterioration.  That, in turn, gave rise to the need for a hip replacement which Mr McNay undertook earlier this year.

14.     I have also had regard to the decision of the Federal Court in Secretary, Department of Social Security v Smith (23 ALD 277) in which Von Doussa J considered the difference between the incapacity for which Mr Smith received compensation and the incapacity for which he received sickness benefit to justify the exercise of the discretion. Similar circumstances apply here and I note, in particular, that, while it is not appropriate or feasible to look behind the settlement reached by Mr McNay for his workers compensation action, he was back at work some five months after his accident and did not resign until September 2001 when he began treatment for his leukaemia. It was then that he commenced to receive disability support pension. Of course, the decision in Smith was made well before the introduction of sections 1160 and 1184K(2) and I must apply those provisions and the limitations they impose on the exercise of the discretion in section 1184K.

15.     When Mr McNay’s 4 years of extreme medical trauma is combined with the disconnection between the injury for which he was compensated and the condition that qualified him for disability support pension, it produces circumstances which are, in my view, special within the meaning of section 1184K of the Act.  I note, in this respect, that the provisions of sections 1160 and 1184K(2) of the Act do not operate to preclude consideration of the absence of a connection between workers compensation payments and social security payments as part of a set of circumstances that are, together, special.

16.     However, I am mindful that Mr McNay is in a far better financial situation than the majority of people in receipt of disability support pension, largely due to his own foresight and careful management of his funds.  His circumstances, therefore, do not include financial hardship.

17.     With that in mind, and having reached the conclusion that his circumstances are special within the meaning of section 1184K of the Act, I consider that it is appropriate that the discretion be exercised to disregard only so much of the compensation lump sum paid to Mr McNay as to reduce the preclusion period to the extent that the amount recovered by Centrelink from his workers compensation lump sum settlement is, in turn, reduced by $5,000.

18.     In deciding the matter in this way, I have had regard to the decision of the Federal Court in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580 in which Einfield J referred to “intuitive justice” and there being no need for the Tribunal, when exercising its discretion to shorten a preclusion period, to determine the precise amount of the compensation lump sum that should be disregarded.  His Honour considered that it may, rather, direct its mind to the effect on the recipient of any reduction of the preclusion period.

Decision

19.     The decision under review is set aside and in substitution therefor the Tribunal decides that so much of the compensation lump sum paid to Mr McNay is to be disregarded as to reduce the preclusion period to the extent that the amount recovered by Centrelink from his workers compensation lump sum settlement is, in turn, reduced by $5,000.

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.

Signed:         .......[Linda Blue]...................................
  Associate

Date of Hearing  30 November 2004
Date of Decision  10 December 2004
Solicitor for the Respondent     Mr Gary Richardson