Reichert and Secretary, Department of Family and Community Services - [2002] AATA 426

DECISION AND REASONS FOR DECISION [2002] AATA 426

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/376

GENERAL ADMINISTRATIVE DIVISION       )
           Re      ALFRED WILHELM LORENZ REICHERT
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr. D.W. Muller, Senior Member

Date4 June 2002
PlaceBrisbane

Decision The Tribunal affirms the decisions to impose a lump sum preclusion period from 13 May 1998 until 16 February 1999 and to recover a refund of $6,240.10 paid by way of disability support pension during the said preclusion period.

.............(Signed)....................
D.W. MULLER
SENIOR MEMBER

CATCHWORDS
SOCIAL SECURITY – preclusion period – refund of disability support pension – no further waiver
Social Security Act 1991: ss17, 1165, 1184(1)

REASONS FOR DECISION

Mr. D.W. Muller, Senior Member

This is an application to review the following decision:
(a)A decision by Centrelink to recover a refund of disability support pension in the amount of $6,240.10; and
(b)A decision by Centrelink to impose a lump sum preclusion period from 13 May 1998 until 16 February 1999.
The following matters are not in dispute and the Tribunal finds that:
(a)Alfred Reichert, the applicant, was born on 15 September 1942.
(b)On 31 July 1997, Mr. Reichert injured his back at his workplace. He was lifting heavy doors when he experienced lower back pain with radiation of pins and needles to the point of numbness down his left leg. He was diagnosed as having a combination of "intradiscal disruption at the lower three levels of the lumbar spine and chronic degenerative change".
(c)Mr. Reichert has not worked since he injured his back.
(d)Mr. Reichert received weekly workers' compensation payments from WorkCover totalling $19,249.84 between 31 July 1997 and 12 May 1998. He also received $4,334.18 from WorkCover for medical, rehabilitation and other expenses. That is, he received a total of $23,584.02 from WorkCover.
(e)From 13 May 1998, Mr. Reichert has received the disability support pension.
(f)As a result of civil action, Mr. Reichert signed an out of court settlement document in which he agreed to accept in full settlement of his claim, $64,000, clear of WorkCover refund of $23,584.02, on 2 October 2000.
(g)Mr. Reichert received the $64,000 on 30 November 2000. The money was paid into his solicitor's trust account, to allow for any statutory refunds to be made prior to a final payout being made to Mr. Reichert.
(h)The lump sum payment received by Mr. Reichert was made partly in respect of lost earnings and lost capacity to earn.
The Social Security Act 1991 (the Act) provides for an income support safety net for citizens who are unable to support themselves or who have no, or very little, income from other sources. A person will not qualify for a full disability support pension if they also receive income from another source. If a person receives weekly workers' compensation payments they will not be able to access disability support pension at the same time. If a person is awarded compensation from a court, or receives a lump sum settlement as a result of court action and part of the award or lump sum is compensation for lost wages, that person will not be entitled to disability support pension for the period during which it would be expected that the person would use the award for living expenses.
If a person receives a lump sum payment by way of settlement of a claim for damages which includes a claim for lost earnings or lost capacity to earn, it is usually difficult to determine what portion of the lump sum should be assigned to lost earnings and what portion should be assigned to cover legal costs, medical expenses and other loss and damage. This matter is covered by s.17 of the Act, which deems 50% of a lump sum payment to be assigned to compensation for lost earnings or capacity to earn and 50% to all of the other expenses. Section 17 is set out in full in the Tribunal documents.
In Mr. Reichert's case he settled his civil action in the District Court for $64,000 (plus $23,584.02 to be refunded to WorkCover). Part of this sum was attributed to damages for lost earnings. He was expected to live on that part attributed to lost earnings for a certain period and not receive disability support pension at the same time.
A combination of section 17 and section 1165 of the Act provides the basis for the formulae for determining the period during which disability pension is not payable. In Mr. Reichert's case the lump sum received was $64,000 plus $23,584.02. Out of the $23,584.02 paid to him by WorkCover, $19,249.84 was by way of weekly payments from 31 July 1997 to 12 May 1998. The amount for weekly wages was refunded to WorkCover and deleted from the lump sum for the purposes of this calculation. That left an amount of $68,334.18 to be apportioned between lost earnings and other loss and damage. Fifty percent of $68,334.18 should have been attributed to compensation for lost earnings, that is $34,167.09. Mr. Reichert was expected to live on $34,167.09 at the rate of $552.63 per week (the "income cut-out amount") that is, for 61 weeks, before being eligible for disability support pension. The period started on 13 May 1988 (when his WorkCover payments ceased) and ended 61 weeks later on 13 July 1999. During that time he was paid disability support pension of $9,685.57. This amount should have been refunded to Centrelink from the lump sum payment because he could not receive disability support pension for a period for which he also received compensation.
As a result of a misunderstanding by an officer of Centrelink, who thought that the $19,249.84 repayment to WorkCover had to come out of the lump sum of $64,000, a preclusion period of 40 weeks was calculated and the sum of $6,240.10 was paid by the solicitors for Mr. Reichert to Centrelink,
When the mistake was eventually discovered Centrelink decided not to pursue Mr. Reichert for the balance of $3,445.47.
Mr. Reichert seeks to have the amount of $6,240.10 which was repaid, further reduced, pursuant to s.1184(1) of the Act. He believes, in effect, that he settled his civil suit for a lump sum which was less than he should have been entitled to. He said that he eventually agreed to a lower settlement figure because he wanted to "stop the procedure". The amount which Mr. Reichert eventually received from his civil action cannot be changed by this Tribunal. However, Mr. Reichert should note that if he had received a greater lump sum, his preclusion period would have been longer and he would have had to repay a larger amount of disability support pension.
The material shows that Mr. Reichert owns a home worth $100,000 jointly with his wife. He owns an old car. He has $25,000 in the bank. He and his wife receive a combined disability support pension income of $745.60 per fortnight.
There are no circumstances sufficiently "special" to warrant the exercise of the Tribunal's discretion in any way which would reduce the preclusion period. Mr. Reichert has already received a very generous benefit of the exercise of discretion in relation to the $3,445.57 mentioned above.
The decision to not extend the discretion is affirmed.
I certify that the 12 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. D.W. Muller, Senior Member
Signed:         .....................................................................................
           B. Hitchcock, Personal Asst.
Date/s of Hearing  7 August 2001
Date of Decision  4 June 2002
Counsel for the Applicant        Mr. Reichert
Respondent  Mr. R. McQuinlan, departmental advocate