Rigano and Secretary, Department of Social Services (Social security) - [2025] ARTA 1283

Rigano and Secretary, Department of Social Services (Social security) [2025] ARTA 1283 (22 April 2025)

Applicant: Miss Rigano

Respondent: Secretary, Department of Social Services

Chief Executive Centrelink

Tribunal Number: 2024/S192560
Tribunal: General Member N Foster
Place:Brisbane
Date:22 April 2025
Decision:The Tribunal varies the decision under review so that Miss Rigano’s compensation preclusion period ends on 9 April 2027.

CATCHWORDS

SOCIAL SECURITY – Disability Support Pension – compensation preclusion period – portion of compensation payment disregarded in special circumstances – severe health issues – special accommodation needs – retaining a significant realisable asset – imminent severe financial circumstances – decision under review varied

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

Statement of Reasons

BACKGROUND

This review is about whether Miss Rigano’s compensation preclusion period should be reduced.
Miss Rigano, who is [age] years old, was severely injured in a motor vehicle accident [in] June 1999. In May 2003 her claim for compensation settled for $5 million. As a result of this settlement, the government agency now known as Services Australia (Centrelink) cancelled Miss Rigano’s disability support pension on the basis that a compensation preclusion period applied to her from 4 June 1999 to 25 March 2077.
On 1 July 2024 Miss Rigano reclaimed disability support pension. On 9 July 2024 Centrelink rejected this claim on the basis that a compensation preclusion period remained in force.
[Business 1], which is the court-appointed manager of Miss Rigano’s financial affairs, requested a review and on 25 September 2024 an authorised review officer affirmed Centrelink’s decision. In concluding that there were not special circumstances that warranted a reduction of the preclusion period, the authorised review officer found that Miss Rigano’s financial circumstances were not worse than the majority of social security recipients as she had available liquid funds of more than $111,000, as well as a house and car.
Miss Rigano applied to the Tribunal on 18 December 2024. The application was heard on 9 April 2025, with [Ms A], Legal Counsel with [Business 1], and [Ms B] and [Ms C] of [Business 1] appearing by video. The Tribunal later made its decision after [Ms A] provided further documents.

CONSIDERATION

Does a compensation preclusion period apply to Miss Rigano?

Under section 1169 of the Social Security Act 1991 (the Act), if a person receives lump sum compensation then a compensation affected payment (such as disability support pension) is not payable for the duration of the person’s compensation preclusion period. This period is calculated under section 1170 of the Act, using a formula that takes into account the compensation part of the lump sum. Under subsection 17(3), this is 50% of the person’s lump sum compensation payment where a claim is settled. In this regard, it is well-established that the gross amount of a person’s lump sum compensation payment must be taken into account – see Secretary, DSS v Banks (1990) 20 ALD 19.
In calculating that a preclusion period of 4,060 weeks[1] applied to Miss Rigano from 4 June 1999 to 25 March 2077, Centrelink has taken 50% of her settlement of $5 million – a figure of $2.5 million – and divided this by the relevant statutory divisor of 615.63. In written submissions lodged with the application to the Tribunal, [Ms A] contended that Centrelink may have erred in its calculation of the preclusion period given that Miss Rigano was actually awarded an amount of $4,411,816.06. The Tribunal notes, however, that the court documentation indicates that this sum was the net amount of Miss Rigano’s settlement after various deductions and repayments occurred. As the court documentation indicates that the gross amount of the settlement was $5 million, the Tribunal is satisfied that Miss Rigano’s preclusion period has been correctly calculated and that her preclusion period end date under the Act is 25 March 2077.
[1] Although the authorised review officer referred to Miss Rigano having a compensation preclusion period of “4,152 weeks from 4 June 1999 to 25 March 2024”, the actual preclusion period applied by Centrelink is 4,060 weeks from 4 June 1999 to 25 March 2077.

Should Miss Rigano’s compensation preclusion period be reduced?

The issue at the heart of Miss Rigano’s application is whether the compensation preclusion period that applies under the Act should be reduced. Under section 1184K of the Act, some or all of a person’s compensation payment may be disregarded in special circumstances, thereby reducing the length of their preclusion period. As Miss Rigano claimed disability support pension on 1 July 2024, the Tribunal must consider whether there are special circumstances that warrant some or all of her compensation lump sum being disregarded under section 1184K of the Act to allow her to be granted the pension at the date of claim or, failing this, that results in her preclusion period ending from some other later point in time.
In her written submissions to the Tribunal, [Ms A] summarised the relevant factual background of Miss Rigano’s case as follows. Miss Rigano suffered a traumatic brain injury in a motor vehicle accident in 1999 and suffered a further brain injury due to a seizure in 2009. Her current issues include an acquired brain injury, post-traumatic epilepsy, frontal lobe syndrome, intellectual disability, anxiety and verbal and physical aggression. Miss Rigano is unable to retain employment and receives one-on-one specialist care on a 24-hour basis. As at December 2024 she had just over $106,000 in liquid assets, as well as a home and a motor vehicle. Due to her high care needs, she has a National Disability Insurance Scheme (NDIS) package of more than $1.3 million for the 2024–25 year but still has to spend $40,300 per annum on personal expenses. These include pharmacy costs, case management fees, medical/dental expenses, property rates and insurance, food and groceries and recreational activities.
In seeking a reduction of Miss Rigano’s preclusion period, [Ms A] submitted at the hearing that there were three matters especially relevant to a finding of special circumstances. First, Miss Rigano’s health had significantly worsened after her seizure in 2009, resulting in her care costs substantially increasing. (A previous written submission from [Business 1] quantified Miss Rigano’s expenditure as being more than $368,000 per annum in the period from 2015 to 2020, prior to NDIS assistance). This higher level of expenditure was not factored into the initial compensation settlement and has resulted in Miss Rigano expending her compensation at a much faster rate than expected. Secondly, [Ms A] contended that Miss Rigano should not be required to sell her home or motor vehicle as these assets are essential for her welfare and have been adapted for her special needs. With her house, it has modifications such as railings and large spaces to allow her to use a wheelchair. With her car, it has a purpose-built, Perspex screen to protect the driver from Miss Rigano if she becomes agitated while being driven somewhere. Thirdly, irrespective of whether Miss Rigano is required to sell her home or not, [Ms A] contended that she does not have enough funds to support herself to the current preclusion period end date. In this regard, financial modelling conducted by [Business 1] in December 2023 projected that, if Miss Rigano remained in her current home, her estate would be fully depleted in 4.5 years, this being 48 years before the end of her preclusion period. More recent financial modelling in November 2024 has indicated that, even if Miss Rigano were to sell her home, her estate would be depleted in 13 years, this being 40 years before the end of her preclusion period. [Ms A] submitted that, ideally, Miss Rigano’s compensation preclusion period should be reduced so as to allow her to be granted disability support pension at the time of her claim in July 2024. If this were not possible, the preclusion period should end from a date in the immediate future in recognition that she does not have the ability to support herself until March 2077.
Prior to the hearing, [Ms A] also provided the Tribunal with a completed Statement of Financial Circumstances form dated 1 April 2025. This document indicated that Miss Rigano had income of $8,950 per annum and expenses totalling $33,850 per annum. In terms of assets, she has a house worth $810,000, a car worth $4,650, bank accounts with a total balance of $36,335.65 and a pension fund balance of $58,797.31. At the hearing [Ms A] told the Tribunal that the income listed in the Statement of Financial Circumstances was mostly comprised of the monthly remittance of $8,400 paid by [Business 1], which Miss Rigano can use for groceries and other personal expenses. This is not income per se but, rather, is money deducted from her investment portfolio. This portfolio is also being used to cover expenses not met through the NDIS, such as $35,000 in recent dental surgery.
[Ms B], who is a trust manager at [Business 1], told the Tribunal that Miss Rigano and her family are particularly worried that her home may have to be sold in order to help meet her living costs. [Ms B] said that Miss Rigano and her family were hoping that some sort of favourable decision could be made in relation to the preclusion period so that Miss Rigano could receive the ongoing financial support that she clearly needs.
At the direction of the Tribunal, [Ms A] provided an up-to-date financial modelling report after the hearing. This document, which was dated 9 April 2025, indicated that Miss Rigano’s current remaining liquid funds of $95,283 would deplete when she reached 46 years of age, this being within three years, i.e. by 2028. Were Miss Rigano to withdraw $10,000 to meet any additional ad hoc medical expenses, her funds would deplete when she reached 45 years of age, being within 2 years, i.e. 2027. In accompanying written submissions, [Ms A] highlighted that, compared to previous financial modelling, Miss Rigano’s 2025 budget had been reduced to $35,800 to prolong her funds as much as possible. Miss Rigano’s uncle had also been assisting with household maintenance from time to time, allowing for this reduction. With regard to the two different financial models, [Ms A] explained that the first was based on Miss Rigano’s current realisable assets and the second was based on the possibility of her requiring ad hoc medical/dental treatment, which was commonly the case for her. [Ms A] submitted that, to place Miss Rigano in the best position so as to not displace her from her current accommodation, she would require access to disability support pension within no later than one to two years.
The hearing papers before the Tribunal also include various reports from doctors and allied health professionals attesting to the severity of Miss Rigano’s complex health issues. Many of these reports emphasise the importance of Miss Rigano remaining in her home of the last 25 years. For example, in a report dated 10 June 2021, [Occupational Therapist A], stated as follows:
Miss Rigano’s neurological impairment prevents her from learning and adjusting to new routines, tasks, people and environments. She has lived in her home for 20 years and is the only resident. Change of environment and familiar routines and people can be very distressing for Miss Rigano, due to neurological impairment. Miss Rigano would not be able to settle into a new living environment due to her ABI. She relies on familiarity of her current home and would lose any independence she has, if placed in a new home environment. An example is when Miss Rigano recently went away for supported holiday. She was banging on a wall in the bedroom where her ensuite bathroom door is located in her own home. Miss Rigano needed to go to the bathroom and could not comprehend that it wasn’t in the same location as it is at home, even when shown by support staff.
More recently, in a report dated 2 December 2024, [Occupational Therapist B] described the risks with Miss Rigano living elsewhere in the following terms:
Relocating would significantly harm Miss Rigano’s well-being and safety due to her complex needs. Her home is tailored to her mobility and cognitive challenges, providing a stable, familiar, and accessible environment crucial for her functioning. Moving would increase her risk of falls, emotional dysregulation, and confusion while disrupting her routines and essential supports. Miss Rigano’s nearby family and long-term care team through [a named programme], offer vital stability and familiarity, which a move would jeopardise. A new support team unfamiliar with Miss Rigano’s communication needs and routines could lead to unnecessary distress and an increase in behaviours of concern. Additionally, she cannot manage prolonged travel or adapt to new environments, which would exacerbate her anxiety and behaviours of concern, making her current home critical for her health and safety.
In a letter dated 8 November 2024, Miss Rigano’s current treating general practitioner, [Doctor A], likewise noted that Miss Rigano had a specially adapted home that had been modified to accommodate her physical needs and to ensure her safety and that selling this home was not a viable option. In particular, the doctor stated that rental accommodation would not meet Miss Rigano’s specialised requirements and could jeopardise her physical safety and mental wellbeing.
It is well-established that the special circumstances discretion in section 1184K of the Act should be exercised sparingly. In Groth v Secretary, DSS (1995) 40 ALD 541, Kiefel J indicated that, for special circumstances to exist, there would need to be something that distinguishes a matter from the usual or ordinary case. This could occur were one to conclude that something unfair, unintended or unjust had occurred. The Tribunal is also mindful that any conclusion about unfairness must be reached having regard to the context and intent of the legislation. As set out in the case law, the compensation provisions in the Act are intended to prevent a compensation recipient from being additionally compensated by receiving payments through the social security system. To avoid this so-called “double dipping”, compensation recipients are precluded from receiving social security payments for a specified period of time.
The case law in relation to section 1184K also indicates that special circumstances will not readily be found where a person retains a significant, realisable asset such as a house – see, for example, Winterbotham and Secretary, DSS [1990] AATA 808. The rationale for this position is that compensation is intended to be used for a person’s
self-support and not for the acquisition of assets. Even so, there are numerous instances in the case law where special circumstances have been found even where part of a compensation settlement is retained in the form of assets – see, for example, Secretary, DSS and VYS (1995) 40 ALD 745. These include cases where tribunals have concluded that requiring a compensation recipient to sell their home would be detrimental to their health and welfare – see, for example, Nelson and Secretary, DSS [2015] AATA 405.
While the existence of financial hardship is not a prerequisite for the exercise of section 1184K of the Act, the Tribunal notes that such hardship has been a common thread in cases where special circumstances have been found. Similarly, departmental policy guidelines in the Social Security Guide (the Guide) state, at 4.13.4.20, that a person’s financial situation should be taken into account when determining if there are special circumstances for the purpose of section 1184K. In particular, the Guide suggests that a person’s financial circumstances need to be severe and worse than the majority of social security recipients and that the value of all of their cash and realisable assets should be taken into account by comparing them with the fortnightly rate of pension. In a situation where a person retains some limited funds, the Guide suggests that special circumstances may be found to commence at a future date if financial hardship is imminent.
In Miss Rigano’s particular case, the Tribunal notes that she was awarded a multi-million dollar compensation settlement in 2003. Although she has been supporting herself from this settlement for more than two decades, her funds have been significantly depleted due to an increase in the costs of her care following new health problems that arose in 2009. The Tribunal accepts that this change in circumstances was beyond Miss Rigano’s control and that, notwithstanding the size of her settlement, it has placed her in a position where she now has insufficient funds to meet her essential living expenses in the long term.
On the evidence before the Tribunal, Miss Rigano was not yet in a position of financial hardship at the time of her claim for disability support pension in July 2024. Even now, she retains liquid funds of more than $90,000. While there will often be cases where it is too early to confidently forecast when a person’s compensation settlement will be fully depleted, Miss Rigano’s remaining liquid funds represent less than 2% of her gross settlement of $5 million. The latest financial modelling provided to the Tribunal indicates that these available funds will be expended within three years at best and that this money may be gone even earlier should some new significant expense arise in the meantime. In such circumstances, the Tribunal accepts that the likelihood of Miss Rigano being in severe financial hardship is imminent and is not merely a matter of conjecture.
While Miss Rigano still retains a significant realisable asset in the form of her home, the Tribunal is mindful that the practitioners involved with her care have emphasised the very detrimental effects that the sale of her home, and requiring her to live elsewhere, is likely to have on her. As is clear from the various medical and allied health reports, Miss Rigano’s health issues are complex and severe, with a range of arrangements having been put in place, including within her home, to assist in managing her health and welfare. While it will often be appropriate to expect a compensation recipient to sell assets purchased with their settlement, the Tribunal considers that Miss Rigano’s case is plainly not one. In any event, were Miss Rigano to sell her home, the financial modelling before the Tribunal indicates that she would still not be able to support herself for the 50 plus years of the preclusion period that are still to run.
In light of such matters and bearing in mind that Miss Rigano will soon have no liquid funds at all to support herself, the Tribunal considers that there are special circumstances in her particular case that warrant the exercise of the discretion in section 1184K of the Act. In determining an appropriate end date for the preclusion period, the Tribunal is conscious of the expectation underpinning the Act that a compensation recipient should support themselves from their settlement for a reasonable period, rather than be supported by the social security system. Given the latest financial modelling suggesting that Miss Rigano has sufficient liquid funds to support herself for at least two more years, the Tribunal considers it appropriate that so much of her compensation be disregarded so that her compensation preclusion period ends on 9 April 2027. This will give Miss Rigano and [Business 1] certainty about the length of time that her remaining liquid funds will need to last while also ensuring that she supports herself from her compensation funds for as long a period as is reasonably practical.

As a compensation preclusion period continued to apply at the date that Miss Rigano applied for disability support pension in 2024, the Tribunal concludes that Centrelink’s decision to reject that claim was correct. However, in light of the Tribunal’s decision to amend the end date of the preclusion period to 9 April 2027, Miss Rigano should lodge a new claim for payment once this date approaches.

DECISION

The Tribunal varies the decision under review so that Miss Rigano’s compensation preclusion period ends on 9 April 2027.

Date of hearing:	Wednesday, 9 April 2025
Representative for the Applicant:	[Ms A], [Business 1]