The Estate of the late Christine Manning and Secretary, Department of Health (Social services)

[2018] AATA 1249

The Estate of the late Christine Manning and Secretary, Department of Health (Social services) [2018] AATA 1249 (19 April 2018)

Division:GENERAL DIVISION

File Number(s):      2017/3704

Re:The Estate of the late Christine Manning

APPLICANT

AndSecretary, Department of Health

RESPONDENT

DECISION

Tribunal:Deputy President Dr P McDermott RFD

Date:19 April 2018

Date of written reasons:        9 May 2018

Place:Brisbane

I affirm the decision under review.

.................................[Sgd].......................................

Deputy President Dr P McDermott RFD

CATCHWORDS

SOCIAL SECURITY – assessment of income for residential aged care purposes – whether deemed income from account-based income streams should have been included – Social Security and Other Legislation Amendment Act 2014 application – applicant alleged contractual relationship – no contractual relationship exists – exceptions in Aged Care (Transitional Provisions) Principles 2014 do not apply – decision under review affirmed

LEGISLATION

Aged Care (Transitional Provisions) Act 1997
Aged Care Act 1997
Social Services and Other Legislation Amendment Act 2014
Social Security Act 1991
Superannuation Industry (Supervision) Act 1993

REASONS FOR ORAL DECISION

Deputy President Dr P McDermott RFD

9 May 2018

INTRODUCTION

1. This is an application by the estate of the late Christine Manning for the review of a decision made by an authorised review officer of the Department of Human Services on 24 May 2017, to affirm a decision made to assess the Applicant’s income for residential aged care purposes.

2. I have to determine whether the assessment of Mrs Manning's income for residential aged care purposes had to include the deemed income from her and her husband's account-based income streams from 1 January 2015 onwards.

3. At the outset of the hearing Mr Manning indicated to the Tribunal that he did not wish to give oral evidence at the hearing and that he relied upon the documents before the Tribunal including the documents which he provided.[1]

   [1] Mr Manning also used a T Document numbering system for the documents which he filed with the Tribunal.

   BACKGROUND

4. In 2010 Mrs Manning moved into the Good Shepherd Home, which is a residential aged care service. In 2010 the Department assessed Mrs Manning's total annual income for aged care purposes as being $5,368.23, and based on this income Mrs Manning was assessed as being required to pay a basic daily fee but no income tested fee.

5. Mrs Manning and her husband had retirement plans which were assessed by the Department as being account-based income streams. As at 17 July 2017 her income stream was valued at [amount deleted for privacy reasons] and her husband's income stream was valued at [amount deleted for privacy reasons].

6. On 17 September 2014, Mrs Manning was advised by letter of changes to the assessment of account-based income streams from 1 January 2015, which were made by the Social Services and Other Legislation Amendment Act 2014. Before these changes took effect, on 31 December 2014 her total annual income was assessed as being $3,681.22. On 1 January 2015 when the changes took effect her total annual income for aged care purposes was assessed as being $58,673.43. On 10 January 2015, Mrs Manning was advised that she was now required to pay an income tested fee of $38.94 per day. On 18 March 2015, her total annual income for aged care purposes was $54,439.83. There has been no challenge to these assessments of income.

7. On 30 November 2015 Mr Anthony Manning, as power of attorney, wrote to the Department and stated that a mistake had been made as they were now required to pay an income tested fee.

8. On 24 May 2017 an authorised review officer reviewed and affirmed the decision to include the deemed income from Mrs and Mr Manning's account-based income streams in the income assessment.

9. On 20 June 2017, Mrs Manning made an application to the General Division of the Administrative Appeals Tribunal to review the decision of the authorised review officer. After Mrs Manning passed away on 26 July 2017, her estate was made a party to the proceedings.

10. The total amount of income tested fee that the estate owes to the aged care home is about $31,802.31. Mr Manning explained that this income tested fee has not been paid.

    CONSIDERATION

11. The Aged Care (Transitional Provisions) Act 1997 applies to continuing care recipients, as defined in the Aged Care Act 1997 (Schedule 1, Dictionary). That Act defines a continuing care recipient to include a continuing residential care recipient (Schedule 1, Dictionary). Mrs Manning was a continuing care recipient.

12. The amount of income tested fee that a continuing care recipient is required to pay is dependent on an income assessment under s 44-21 of the Aged Care (Transitional Provisions) Act 1997. The income of a continuing care recipient is assessed according to each payment period.

13. Mr Manning confirmed that Mrs Manning has never been entitled to an age pension; this accords with the information before me. In such circumstances, the care recipient's total assessable income is assessed under s 44-24(1) of the Aged Care (Transitional Provisions) Act 1997 which provides:

    If the care recipient is not entitled to an income support payment, his or her total assessable income is the amount the Secretary determines to be the amount that would be worked out as the care recipient's ordinary income for the purpose of applying Module E of Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991.

14. This subsection refers to an “income support payment”. During the hearing Mr Manning sought clarification of the meaning of an income support payment. The dictionary in s 23 of the Social Security Act1991 defines an “income support payment” as:

    (a) a social security benefit; or

    (aa) a job search allowance; or

    (b) a social security pension; or

    (c) a youth training allowance; or

    (d) a service pension; or

    (e) an income support supplement.

15. Under s 23 of the Social Security Act 1991 a “social security pension” is defined as including an age pension.

16. As Mrs Manning has never received an age pension she was not entitled to an “income support payment” and so her total assessable income had to be determined in accordance with s 44-24(1) of the Aged Care (Transitional Provisions) Act 1997, which requires the total assessable income of a care recipient to be determined in accordance with Module E of s 1064 of the Social Security Act 1991.

17. Module E concerns the ordinary income test: Note 2 to that Module indicates that the ordinary income test is affected by provisions concerning income from financial assets (including income streams (short term) and certain income streams (long term) (Division 1B of Part 3.10)). Section 9 of the Social Security Act 1991 defines "income stream" as an income stream arising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993. There is no issue that the retirement plans of both Mr and Mrs Manning come within this definition. Under s 1064-E2 of Social Security Act 1991 the couple's ordinary incomes (on a yearly basis) were divided by 2 to work out the amount of the person's ordinary income for the purposes of this Module.

18. Prior to 1 January 2015, an account based income stream was assessed based on the actual income earned from the income stream. The amendments to the Social Security Act 1991 by the Social Services and Other Legislation Amendment Act 2014, which came into effect on 1 January 2015, provide for income streams to be assessed under deeming rules. Section 1078 of the Social Security Act 1991 applies to a person who is a member of a couple, other than a pensioner couple (s1078(1)) and provides that a person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with the section. The deeming rules assume that financial investments are earning a certain rate of income, regardless of the amount of income they are actually generating. Having regard to s 44-24(1) of the Aged Care (Transitional Provisions) Act 1997 these deeming rules apply to how the care recipient's ordinary income is assessed.

19. Transitional provisions in the Social Services and Other Legislation Amendment Act 2014 provide that the new deeming rules would not apply to a person who was receiving an income support payment before 1 January 2015. Note 2 to s 1097A of the Social Security Act 1991 states:

    Part 2 of Schedule 11 to the Social Services and Other Legislation Amendment Act 2014 preserves the rules in this Subdivision for a certain kind of income stream that was being provided to a person immediately before 1 January 2015 where the person was receiving an income support payment immediately before that day provided that, since that day, that income stream has been provided to the person and the person has been continuously receiving an income support payment.

20. As Mrs Manning was not receiving an income support payment (such as age pension) immediately before 1 January 2015, the transitional provisions have no application to her.

21. Mr Manning contends that the income tested fee could not be changed as the amount to be paid was agreed when Mrs Manning first entered care. At the hearing Mr Manning used the language of contract in referring to offer and acceptance. However, there is no contractual relationship between a care recipient and the Department. The contractual relationship is between the aged care facility and Mrs Manning. Legislation which can be amended from time to time by Parliament makes provision for the income tested fee.  The respondent determines the amount that an aged care service can ask a care recipient to pay and the amount that the respondent will provide a subsidy to the aged care service.

22. There is one matter that I need to consider. At the hearing Mr Manning stated that on 12 March 2015 he had a conversation with an officer who advised him that the letter of 10 January 2015 was incorrect and that he did not have to pay income tested fees. I have examined the Departmental records of that telephone call which do not support his understanding of the discussions on that date. The contemporaneous Departmental note records that Mr Manning was contacted and the note contains the comment that the officer “explained new … income tested fees”. In the record of the conversation that Mr Manning provided he states that the Department would provide confirmation in writing that the income tested fees were not payable; however, there is no such written confirmation in evidence.

23. As a matter of completeness I should mention that there are exceptions which are outlined under ss 48 to 54 of the Aged Care (Transitional Provisions) Principles 2014. These principles commenced on 1 July 2014, and were made under s 96-1 of the Aged Care (Transitional Provisions) Act 1997. The Secretary contends that none of these exceptions are relevant to the matter before the Tribunal and this is not disputed by Mr Manning. Certainly there is no evidence before me that the exceptions apply to the application.

    DECISION

24. I affirm the decision under review.

I certify that the preceding 24 (twenty-four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Dr P McDermott RFD

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Associate

Dated: 9 May 2018

Date of hearing:	19 April 2018
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services