Murphy and Department of Health and Aged Care - [2000] AATA 351

DECISION AND REASONS FOR DECISION [2000] AATA 351

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S1999/174

GENERAL ADMINISTRATIVE DIVISION       )
           Re      MARY MURPHY
  Applicant
           And    DEPARTMENT OF HEALTH AND AGED CARE
  Respondent

DECISION

Tribunal President D F O'Connor

Date17 April 2000
PlaceAdelaide

Decision      For the reasons given orally at the conclusion of the hearing in this matter, I affirm the decision under review.
  ..............................................
  President
CATCHWORDS Aged Care – hardship application – seeking waiver of accommodation charge on basis of future hardship – definition of hardship

REASONS FOR DECISION

17 April 2000 PRESIDENT D F O'CONNOR

This is an application to review a decision of the respondent, who refused to waive an accommodation charge for a Mr Robert Murphy, husband of the applicant, who is a resident of a nursing home. The administration of the fee structure in nursing homes is set out in the Aged Care Act 1977 of the Commonwealth and the Aged Care Principles made under section 96(1) of the Act.
Nursing home residents in receipt of an aged pension generally pay a fee consisting of two components, a basic daily care fee which is indexed to be 85 per cent of the aged pension, and a daily accommodation charge. The liability for an amount of the latter is dependent on the resident's assets and income. The charge is payable for a 5-year period after which the resident is liable to pay only the daily care fee. In circumstances of financial hardship the charge may be waived. It is the application of section 44.31 of the Act and section 21.39 of the Principles which are relevant to such an application.
Mr Murphy entered care at the Aldis Nursing Home on 11 February 1998 as a resident requiring high level care. In December 1999 Mrs Murphy, on behalf of her husband, submitted a financial hardship application seeking a waiver of the accommodation charges. That application can be found at document T2 of the T documents. The respondent decided that Mr Murphy was not eligible for a waiver of the accommodation charges on the grounds of hardship and communicated this by letter. The decision was reconsidered and the original decision was confirmed on review. A copy of that letter notifying Mrs Murphy can be found at T15.
At this hearing all of the material in the T documents and the supplementary T documents was before me and also an affidavit from Mrs Murphy, the care recipient's wife, was tendered, without objection or cross-examination. All of the facts deposed in that affidavit and the materials in the T documents have been considered in making this decision. The amount of the various rates and charges in place are common ground between the parties. The respondent, in calculating the relevant assets and income for the hardship application, used information from Centrelink and material provided by Mr and Mrs Murphy's credit union.
In December of 1998, the time of the entry to the nursing home, Mr Murphy received a rate of pension, the illness separated rate of $362.70 per fortnight. The respondent states that this rate is higher than the standard couple rate and equals the standard single rate. This is done to take into account the fact that Mr Murphy resides in care. The respondent then, using that rate, reduced the pension income by $50 to reflect Mr Murphy's share of the amount that Mrs Murphy claims she is required to pay for the maintenance of the retirement unit in which she lives. The respondent concluded that Mr Murphy received $312.70 per fortnight in income.
In looking at the assets which were relevant to the claim for waiver on account of hardship, the respondent assessed that Mr and Mrs Murphy held financial investments of $72,600 and other assets valued at $16,000. However, as those other assets are unrealisable, because they constitute a car and household effects in use by Mrs Murphy which she could not reasonably be expected to sell, those assets valued at $16,000 were not included. Similarly, the couple's unit in the retirement village was not included because as Mrs Murphy continued to reside there it was not available for the calculation. Joint realisable assets were therefore valued, as I said before, at $72,600 or $36,300 for each party concerned.
As to the current financial situation, there was material provided, firstly, to the Tribunal in a statement by Mrs Murphy dated 5 October 1999. At that time Mr Murphy paid to the nursing home $311.50 per fortnight in resident's fees. He had at that time, the separated rate of pension plus pharmaceutical allowances of an additional $5.40 per fortnight, therefore he had a total of $371.90 per fortnight each in pension. The affidavit of 14 April 2000, which I referred to before, updates and expands this information.
There is no disagreement between the parties that if the fees levied for daily care exceed Mr Murphy's pension entitlements the assets must be realised to make up the difference. Cost of self support for Mr and Mrs Murphy and the goods and services in addition to those provided at the nursing home further depletes the couple's assets. It is also not contested that the Act expresses the policy intention that persons contribute to the cost of their care should they be left with a nominated sum after making such contributions, by creating the concept of a minimum asset level.
In December 1998 the minimum asset level was $23,000. In November 1999 it had increased to $24,500. Mr Murphy's assets, if valued at $36,300, are, on their face, in excess of the relevant minimum permissible asset value as at both December 1998 and November 1999 and, as it was put in submissions, at the present time. The respondent submits that Mr Murphy's asset share of $36,300 could be used to assist in meeting his care costs as residents are generally expected to utilise savings before applying for a financial hardship determination.
The applicant claimed the respondent should not have taken into account at any time non-realisable assets but it does seem to me, from a reading of the material, that the respondent has discounted the amount of unrealisable assets from the total asset pool before calculating the assets retained by Mr Murphy and in my view has correctly complied with the relevant Principles. Counsel for both applicant and respondent agree that the only issue remaining then between the parties is whether the levying of a $12 daily accommodation charge for Mr Murphy should be waived on account of hardship.
Principle 21.39 of the Residential Care Subsidy Principles 1997 lists the relevant matters to be taken into account and I now deal with those matters. Mr Murphy has an income, which is the illness separated rate of pension and he has, as was conceded this morning, some interest on his savings. He has a range of financial arrangements. He has money in the bank, but he has also an obligation to contribute towards the maintenance cost of the retirement unit in which his wife lives. He has income support, as I said before, the illness separated rate of pension, and he has a car, a retirement unit, household contents and a bank account and some unrealisable assets, which have also been referred to.
Mrs Murphy, who also claims hardship in this application, is also in receipt of a pension which is higher than the usual amount and has a share of the assets, as I said before, of approximately $36,000 and also that money is invested at the present time.
The meaning of the word "hardship", in my view, implies the creation of an extreme condition. The applicant submitted that there were degrees of hardship and drew my attention to a number of authorities to support that argument. None of those, of course, related to the use of the word in the context of this legislation. In my view, even if one accepted that there are degrees of hardship, in order to conclude that there is an individual case of financial hardship a decision maker must conclude that the effect on the claimant is so severe at the time of making the determination that it would amount to hardship.
In opposition to this the applicant argues that even though one might not be able to come to a conclusion that the effect on this applicant would be severe at the present time, nevertheless to impose the $12 charge will create a severe effect in the future. The future nominated was the 5 year period in which the charge would be payable. Even though 21.39(2) allows the Secretary to have regard to other matters, as a matter of discretion, in coming to a view as to whether to waive a charge, this would not, in my view, include speculation as to the future. The decision being reviewed is an administrative one. It can and, as counsel for the respondent submits, will be reconsidered on application if the financial circumstances of the applicant change.
This is contemplated by the legislation which requires care recipients holding assets above the minimum assets to use those assets to contribute to the cost of their care. Assets are understood to be finite. If they cease to exist then the situation could and should be reviewed. For a decision-maker to speculate as to the future, which may include windfalls or even adverse circumstances, in determining individual applications would, in my view, be an unusual course to take when exercising any discretion which is available.
The matter to be taken into account in assessing financial hardship should be the current financial situation of the relevant parties. In this case these do not amount to one of hardship because there exists the means at present to pay the lawful levy charge. I therefore conclude that the claim for hardship to this applicant and/or the care recipient is not made out. I consequently affirm the decision under review.
I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of her Honour Justice O'Connor, President
Signed:         .....................................................................................
  Associate
Date/s of Hearing  17 April 2000
Date of Decision  17 April 2000
Counsel for the Applicant        Ms Castles
Solicitor for the Applicant         Women's Legal Service
Counsel for the Respondent    Mr Bell QC
Solicitor for the Respondent    Phillips Fox