Reed and Secretary to the Department for Health and Ageing
[2004] AATA 1029
•1 October 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1029
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2004/697
GENERAL ADMINISTRATIVE DIVISION ) Re JOHN REED
Applicant And
SECRETARY TO THE DEPARTMENT FOR HEALTH AND AGEING
Respondent
DECISION
Tribunal Ms N Isenberg, Member Date 1 October 2004
PlaceSydney
Decision The decisions under review are set aside to the extent that the pharmaceutical expenses upon which the calculation of Mr Reed’s contributions was made should be $50 per month, or such other amount as can be substantiated by receipts. The matters are remitted to the Respondent to undertake those calculations in the light of the substantiated pharmaceutical expenses.
The parties are at liberty to apply. [SGN] Ms N Isenberg
Member
CATCHWORDS
AGED CARE ACT – Applicant suffering from Parkinson’s disease and dementia – Applicant moved from family home to hostel – whether payment of fees to hostel creates financial hardship for Applicant - whether daily income-tested reduction should be taken to zero – eligibility for financial hardship supplement – decision under review set aside to the extent of providing for pharmaceutical expenses.
LEGISLATION
Aged Care Act 1997 – sections 44-22(2), 44-31(1), 58-2, 85-5, 86-8
CASE LAW
Murphy and Department of Health and Aged Care [2000] AATA 351
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634REASONS FOR DECISION
1 October 2004 Ms N Isenberg, Member
DECISION UNDER REVIEW
1. An application dated 9 June 2004 (T1) has been made to the Administrative Appeals Tribunal (“the Tribunal”) by Mrs Susan Reed on behalf of her husband, Mr John Reed (“the Applicant”), pursuant to section 86-8 of the Aged Care Act 1997 (“the Act”) for the review of two reviewable decisions made by the delegate of the Secretary to the Department of Health and Ageing (“the Respondent”). The Respondent made two decisions under sections 44-22(2) and 44-31(1) of the Act. These two decisions were confirmed by another delegate of the Respondent following a reconsideration of the decisions under section 85-5 of the Act.
2. The reviewable decisions are set out in a submission to the delegate and in a decision letter to the Applicant dated 12 February 2004 (T6).
3. First, the delegate decided not to determine under section 44-22(2) of the Act that the daily income-tested reduction in respect of Mr Reed should be taken to be zero.
4. Second, the delegate also decided not to make a determination under section 44-31 of the Act that Mr Reed was eligible for a hardship supplement. The delegate refused to make this determination because she was not satisfied that paying the maximum daily amount of resident fees worked out under section 58-2 of the Act would cause the care recipient financial hardship.
5. Each of these decisions was confirmed following a review by another delegate of the Secretary under section 85-5 of the Act (T10 and T11).
BACKGROUND
6. Mr Reed unfortunately suffers from Parkinson’s disease and dementia. Mrs Reed became unable to care for him full time, and in December 2003 he was placed in hostel care, at the Orana Court Hostel.
7. The fees at the hostel are made up of basic daily care and income-tested fees.
8. Mr Reed is required to contribute towards these fees. This contribution was calculated by totalling Mrs Reed’s net income of $1183.23 per fortnight and Mr Reed’s pension of $197.50 per fortnight. Their joint income was assessed at $1380.73, half of which was attributed to Mr Reed.
9. His contribution to the fees was determined to be $370.58 per fortnight for basic daily care fees and $163.10 per fortnight for income-tested fees. At the time of application he was said to have had pharmaceutical and continence expenses of $4.55 and $29.35, respectively, per fortnight.
ISSUE BEFORE THE TRIBUNAL
10. The issue for the Tribunal is whether payment of the hostel fees creates financial hardship for Mr Reed.
LEGISLATION
11. The first decision was made under section 44-22(2) of the Act and involved a consideration as to whether a determination should be made that the daily income-tested reduction in relation to Mr Reed is to be taken to be zero.
12. Section 44-22(2) provides:
“Section 44-22 Daily Income tested reduction to be taken to be zero in some circumstances
(2) The Secretary may, in accordance with the Residential Care Subsidy Principles, determine that the daily income tested reduction in respect of the care recipient is to be taken to be zero.”
13. The second decision was made under section 44-31(1) of the Act and involved a consideration as to whether a determination should be made that Mr Reed was eligible for a hardship supplement.
14. Section 44-31(1) provides:
“Section 44-31 Determining causes of financial hardship
(1) The Secretary may, in accordance with the Residential Care Subsidy Principles, determine that the care recipient is eligible for a hardship supplement if the Secretary is satisfied that paying the maximum daily amount of resident fees worked out under section 58-2 would cause the care recipient financial hardship.
Note: Refusals to make determinations are reviewable under Part 6.1.”
THE HEARING
15. A hearing was held on 14 September 2004 at which Mrs Susan Reed represented her husband, the Applicant, and the Respondent was represented by Mr B Feneley, Senior Legal Officer of the Department of Health and Ageing (“the Department”).
16. I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.
17. Mrs Reed gave evidence by conference telephone, and was cross-examined on behalf of the Respondent. I also asked her questions.
18. Mrs Reed’s position was that the application of the basic daily care fees and income-tested fees cause her and her husband hardship. Out of her income she pays $543.20 for the care of her husband, leaving her with only $629.59 to maintain herself and the family home.
19. Her evidence was that her expenses (expressed here fortnightly) are as follows:
Phone $30
Electricity $57
Water $10
Rates $58
Pool chemicals $30
Dog grooming $17
Dog food $40
Food $350
Clothing $50
Haircuts $40
Shoe repairs $5
Foxtel $33
Petrol $40
TOTAL $760
20. Mrs Reed said she continues to clothe her husband out of these funds, and pay for excursions organised by the hostel. Because the food at the hostel is of indifferent quality she buys her husband “treats” such as Chinese food or sweets.
21. She said the expenses associated with the dog are necessary as the dog is a great source of companionship to her husband when he comes home for his overnight visits.
22. She retains the Foxtel for the sport because her husband used to be a horse trainer and she tapes horse races to play for him on his visits.
23. Solar heating to the pool was installed so as to assist her husband’s mobility and co-ordination. The house itself provides familiar surrounds to him, bearing in mind the nature of his condition.
24. In addition, her evidence was that she has recently had the following expenses:
Pool filter $1000
Veterinary fees $500
The veterinary fees were necessary as the dog was “pining” for Mr Reed.
25. Shortly she will be required to meet the following expenses:
Repair to blower $150
Vehicle service $200
Blocked drains $400
House painting $2000
In addition, her husband is in urgent need of dental work – he is having trouble chewing and swallowing. He has been on the public health waiting list for 3 months, and there is no indication when he may be reached.
26. Mr Reed’s specialist has not seen him since March and Mrs Reed and her husband’s GP consider it necessary to engage a new gerontologist/neurologist. However even the initial consultation will be $165 and Mrs Reed cannot afford this, even taking into account the likely Medicare rebate. From her previous experience with her husband’s doctors, in order to monitor and adjust his medication he will have to be reviewed at least monthly, at further expense.
27. Mrs Reed said that her husband’s pharmaceutical expenses were now about $50 per month.
28. She gave evidence that she has cancelled her gym membership and her medical benefits funds contributions. Previously she and her husband would holiday in Queensland or the South Pacific annually, go out to dinner and travel to Sydney. Now those activities are out of the question, for financial reasons.
29. Ms Campbell, an Assistant Director in the Income Testing Hardship and Client Support Section, Residential Program Management Branch, with the Department, also gave evidence, in accordance with her statement (Exhibit 4). Ms Campbell is responsible for consideration of hardship applications made under the provisions of the Act.
30. She said the Act recognises that some individuals may experience financial hardship in paying basic daily care fees, income-tested fees, or an accommodation payment. The intent of the individual hardship provisions in the Act is to ensure that access to aged care under the Act is based on need, rather than on the ability to pay. The hardship provisions are designed to assist people who, because of factors outside of their control, are experiencing genuine and severe financial hardship and are therefore finding it difficult to contribute to the cost of their care.
31. Ms Campbell explained that in determining eligibility for financial hardship assistance, the totality of Mr Reed’s financial circumstances had been examined; but the family home, the share portfolio, the car and the bank account had all been excluded from the calculation of his assets. All that was taken into account was Mrs Reed’s salary and Mr Reed’s pension at the “separated by illness rate”. His expenses for pharmaceutical and continence goods were also taken into account. He was not asked to pay an accommodation bond or charge, as might otherwise have been the case.
CONSIDERATION OF EVIDENCE AND FINDINGS
32. In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.
33. In respect of income-tested fees under section 44-22(2) of the Act the Secretary may, in accordance with the Residential Care Subsidy Principles (“the Principles”), determine that the daily income-tested reduction in respect of an applicant should be taken to be zero. However, the Principles do not provide any guidance in relation to making such a determination. The Department has produced Guidelines to assist delegates to determine individual cases of financial hardship.
34. In considering the application for financial hardship the delegate had regard to the Guidelines. These Guidelines suggest that a person would not be in financial hardship for hardship assistance purposes unless they retained less than 15% of the maximum single rate age pension after paying their essential care related expenses. This threshold, at the time of assessment was, I am informed, $65.42 per fortnight. The delegate found that Mr Reed would be left with an amount of $114.44 per fortnight after paying his essential care related expenses, that is, an amount in excess of the threshold amount referred to in the Guidelines. The delegate found that, as Mr Reed was left with an amount of income exceeding the threshold amount referred to in the Guidelines, he was not eligible for financial hardship assistance in this case.
35. In respect of the hardship supplement, section 21.39 of the Principles specifies the matters to which I must have regard to in deciding whether to make a determination that Mr Reed is eligible for a hardship supplement and in determining a lesser amount of resident fees under section 44-31(1) of the Act. Those Principles are expanded upon in the Guidelines.
36. As to whether the Guidelines should be followed by me I note that Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 has established that the Administrative Appeals Tribunal should follow publicly declared Ministerial policy or Departmental Guidelines unless there is some good reason not to.
37. I consider that this case is not one in which a departure from the Guidelines is appropriate, as the threshold for retained disposable income (15% of the maximum single rate pension after paying essential care related expenses) applies to all care recipients.
38. In coming to this view I accept the Respondent’s contention that financial hardship is a relative concept. Not all applicants who experience financial difficulties qualify for hardship assistance under the Act. Before deciding that an applicant should be granted financial hardship assistance I need to be satisfied that Mr Reed was experiencing severe financial hardship.
39. The Respondent referred me to the decision of Murphy and Department of Health and Aged Care [2000] AATA 351 in which Justice O’Connor, then President of this Tribunal, said at paragraph 13:
“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 work 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”.
40. Although Mrs Reed was critical of the case and pointed out various aspects in which it differs to her husband’s matter, Justice O’Connor was discussing the concept of hardship in the context of the Principles under consideration in this matter.
41. Under the Guidelines a care recipient would not be considered to be experiencing severe financial hardship where they are left with more income per fortnight than a means-tested pensioner on a single maximum aged pension who may be asked to pay up to 85% of their pension in basic daily care fees.
42. In the present case, Mr Reed was left with an amount of income exceeding the minimum threshold level referred to in the Guidelines, after paying his essential care related expenses. On this basis he is not eligible for financial hardship.
43. I observe, however that the pharmaceutical fees taken into account in the decision under review has been calculated were considerably less than that asserted by Mrs Reed, namely $50 per month. Mrs Reed gave evidence of this increased expenditure at the hearing, and because the hearing was conducted by telephone, could not produce receipts. For consistent application of the Guidelines that revised amount, providing it can be substantiated by receipts, is the appropriate amount upon which Mr Reed’s calculations should be made. If, once those calculations are undertaken, Mr Reed’s retained income is less than 15 per cent of the maximum single rate age pension after paying essential care related expenses then he would satisfy the hardship criteria.
To that extent the decision under review is set aside.
44. I observe Mrs Reed’s evidence about maintaining the home and pool, the dog and Foxtel for her husband. I am not prepared, in the absence of medical evidence to include those items of expenditure as part of Mr Reed’s essential care outgoings. It may be, as was discussed at the hearing, that Mr Reed’s new treating specialist will have some views about those issues, which may encourage Mrs Reed to seek a further review of her husband’s contributions if evidence is available of the therapeutic value.
DECISION
45. The decisions under review are set aside to the extent that the pharmaceutical expenses upon which the calculation of Mr Reed’s contributions was made should be $50 per month, or such other amount as can be substantiated by receipts. The matters are remitted to the Respondent to undertake those calculations in the light of the substantiated pharmaceutical expenses.
The parties are at liberty to apply.
I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member
Signed: M Di Condio
AssociateDate of Decision : 1 October 2004
Date/s of Hearing : 14 September 2004
Representative for the Applicant : Mrs ReedSolicitor for the Respondent : Mr B Feneley, Department of Health and
Ageing
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