Whittaker and National Disability Insurance Agency
[2022] AATA 729
•11 April 2022
Whittaker and National Disability Insurance Agency [2022] AATA 729 (11 April 2022)
Division:NATIONAL DISABILITY INSURANCE SCHEME DIVISION
File Number: 2021/4215
Re:Bryce Whittaker
APPLICANT
AndNational Disability Insurance Agency
RESPONDENT
DECISION
Tribunal:Senior Member Buxton
Date:11 April 2022
Place:Brisbane
The Tribunal sets aside the decision under review and remits this matter to the Respondent for reconsideration with the following direction:
·The National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (Cth) rule 3.13(f) reduction is increased to $37,479.35, and the Compensation Reduction Amount is to be recalculated accordingly and otherwise calculated in accordance with the decision under review.
....................[SGD].................................
Senior Member Buxton
Catchwords
NATIONAL DISABILITY INSURANCE SCHEME – Compensation – Compensation Reduction Amount – damages in respect of personal injury – National Disability Insurance Scheme component – objectively identifiable – set aside and remit
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) ss 35, 38
National Disability Insurance Scheme Act 2013 (Cth) ss 11, 34, 35, 100
National Disability Insurance Scheme (Supports for Participants) Rules 2013 (Cth) rr 5.1 7.5
National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (Cth) rr 1.2, 3.1, 3.11, 3.12, 3.13, 3.14, 4.4Cases
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
McGarrigle v NDIA (2017) 252 FCR 121
McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Secondary Materials
J.A. Simpson and E.S.C Weiner, The Oxford English Dictionary (Oxford University Press, 18th ed, 1989)
National Disability Insurance Agency, Compensation Operational Guideline, (Web Page) < Chapters 4.3, 4.4
REASONS FOR DECISION
Senior Member Buxton
11 April 2022
The Applicant, a 26 year old man who lives with his father, seeks review of a decision made by a delegate of the Chief Executive Officer of the Respondent on 23 June 2021 pursuant to section 100 of the National Disability Insurance Scheme Act 2013 (Cth) (‘the NDIS Act’). A hearing of the review application was conducted by the Tribunal on 16 March 2022 by telephone conference.
Since 2017 the Applicant has been a participant in the National Disability Insurance Scheme (‘NDIS’). He sustained a severe traumatic brain injury and a series of serious physical and psychological injuries as a result of a catastrophic motor vehicle accident in 2012 when a motorcycle on which he was a pillion passenger collided with another vehicle.[1] In 2014 the Applicant commenced proceedings in the Supreme Court of Queensland claiming compensation for his injuries against both the driver of the other motor vehicle and the relevant compulsory insurer.[2] The claim was compromised, and the agreed settlement was sanctioned by Justice Flanagan of the Supreme Court of Queensland on 23 November 2015.[3]
[1] Exhibit 1, H2 Respondent’s Statement of Facts, Issues and Contentions dated 23 December 2021, [5].
[2] Exhibit 1, H18 Supreme Court of Queensland dated 23 November 2015, 74-80.
[3] Ibid, 68-71.
The Applicant, through his father, seeks review of a particular aspect of his statement of participant supports approved by the Respondent on 10 May 2021, which is due to be reviewed by 10 May 2022. Various reasonable and necessary supports were funded for the Applicant in this statement, but the relevant funding has been reduced by the Respondent through the application of a Compensation Reduction Amount (‘CRA’) of $15,531.12 for the period of the statement of participant supports.[4] It is from this decision, and in particular the application of the CRA to his funded supports, that the Applicant seeks review.
[4] Exhibit 1, H33 Compensation Reduction Amount – Outcome dated 10 May 2021.
The Respondent provided to the Applicant and his father an additional letter, dated 10 May 2021, that set out the calculation of the CRA as follows:[5]
[5] Ibid.
NDIS Rule application 3.13 Figure
Compensation settlement $4,140,000.00
Subtract Medicare repayment $1,528.95
Subtract Centrelink repayment $35,324.56
Subtract value of any period of preclusion
from a statutory scheme of entitlements, for
example Centrelink (or 50% if a preclusion
period has not been applied and economic
loss has been awarded) $2,070,000.00
SUBTOTAL $2,033,146.49
Use the lesser of the sub total and the
amount determined by the NDIA Office of
Scheme Actuary
The amount determined by the NDIA Office
of Scheme Actuary is based on the expected
lifetime cost reasonable and necessary
supports if the person had been a participant
of the NDIS since the date of injury $758,000.00
Subtract NDIS type supports paid for on
behalf of Bryce from 14 January 2012 to 6
March 2019 $0.00
Subtract the Compensation Reduction
Amounts that would have been applied to
earlier NDIS Plans but have been ignored by
applying Special Circumstances $31,215.96
Total Compensation Reduction Amount $726,784.04
The Respondent now submits that the final figure in the table should read $37,479.35,[6] and the CRA figure adjusted accordingly, as a result of further evidence provided on behalf of the Applicant with respect to various expenses for supports for the Applicant that have been met directly. Otherwise, the Respondent submits that the decision under review is correct and should be affirmed (or, perhaps more appropriately, varied by this proposed amendment to the CRA calculation).
[6] Exhibit 1, H2 Respondent’s Statement of Facts, Issues and Contentions dated 23 December 2021, [47]-[51].
The Applicant submitted that the Respondent has not used the correct formula at all, and more is said about this in the reasons that follow. However, even if the correct formula has been adopted, the Applicant has submitted various receipts for expenses totaling $45,779.33 and the effect of the Applicant’s submission is that, if it is appropriate to calculate CRA in this way, the figure of $45,779.33 should be the final reduction in the calculation as this is the total cost incurred directly by the Applicant for payments of supports of a kind funded under the NDIS Act that would have been applied to earlier plans.[7] However, the Tribunal notes that some of those receipts related to medical expenses or leisure pursuits that are not contemplated by section 34 of the NDIS Act as reasonable and necessary supports.[8] The Tribunal accepts the Respondent’s submissions and calculation of the CRA amounts that would have been applied to earlier plans as $37,479.35.[9]
[7] Exhibit 1, H1 Applicant’s Statement of Facts, Issues and Contentions dated 18 January 2022.
[8] s 34(1)(f) of the NDIA Act; rr 5.1 and 7.5 of the National Disability Insurance Scheme (Supports for Participants) Rules 2013 (Cth).
[9] Exhibit 1, H2 Respondent’s Statement of Facts, Issues and Contentions dated 23 December 2021, [50].
In calculating and applying the CRA, the Respondent has relied upon particular provisions of the National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (‘Compensation Rules’) which have statutory force, having been made pursuant to an express power in section 35 of the NDIS Act. Those rules required the calculation of CRA but only if statutory requirements are met. The questions for the Tribunal to determine, in order to arrive and the correct application of the Compensation Rules, are:
(a)Is the Settlement Amount “compensation” within the meaning of section 11 of the NDIS Act;
(b)Is it possible to identify the “NDIS Component” of the Settlement Amount pursuant to rule 3.1(a)(i) of the Compensation Rules;
(c)If so, is the “NDIA Component” of the Settlement Amount “objectively identifiable” pursuant to rule 3.1(a)(ii) of the Compensation Rules;
(d)Should the CRA ” be calculated under rules 3.11 and 3.12, or alternatively, under 3.13 and 3.14 of the Compensation Rules; and
(e)If it is proper to calculate the CRA under rules 3.13 and 3.14 of the Compensation Rules, has the Respondent has applied a proper calculation.
The Tribunal’s task is to stand in the shoes of the Respondent and make the correct or preferable decision on the material before it.[10] The Tribunal is to determine whether the correct or preferable decision is to approve the statement of participant supports insofar as it applies a reduction to the funded supports on account of the amount received by the Applicant from the sanctioned settlement of his claim and, if not, to set aside that decision and remit it for approval in accordance with the correct approach to the issue of any reduction.[11]
[10] Shi v Migration Agents Registration Authority (2008) 235 CLR 286, [37]-[38], [45]-[46] (Kirby J), [99] (Hayne and Heydon JJ), [140]-[143] (Kiefel J); Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60.
[11] McGarrigle v NDIA (2017) 252 FCR 121, [85].
Consideration
“Compensation” is defined in section 11 of the NDIS Act, relevantly, as a payment (with or without admission of liability) in respect of compensation or damages in respect of personal injury, in settlement of a claim for damages that is wholly or partly in respect of the cost of supports that may be provided to a participant (whether or not specifically identified as such).
The Applicant submitted that he received a “compromise sum”, but not “compensation”, and relied on the fact that the words “settlement amount” and “compensation amount” did not appear in the order sanctioning the settlement of the Supreme Court proceedings.[12]
[12] Exhibit 1, H1 Applicant’s Statement of Facts, Issues and Contentions dated 18 January 2022, [21]-[25].
The Tribunal does not accept the Applicant’s submission on this issue. It is uncontroversial that, in order to have a compromise, one must first have a claim. In this case, the claim was for damages as a result of the injuries sustained by the Applicant in the accident. When the parties agreed to negotiate a settlement of the claim, the sum received by the Applicant was in the nature of compensation for his injuries. The settlement was of a nature that required sanction by the Court. The relevant sanction order defines the lump sum damages as “the settlement sum” and refers to the settlement throughout the relevant order. Such an interpretation is consistent with clauses 4.3 and 4.4 of the Compensation Operational Guidelines, which sensibly contemplate that a claim for compensation may be made (as here) by a person who later becomes a participant in the NDIS.
In any event, the Applicant (through his father) accepted during the hearing, quite appropriately, that the claim was, expressly, for damages for personal injury, at least in part in respect of supports that may be provided under the NDIS. As the Applicant has received a payment in respect of his damages claim, this payment falls within the definition of “compensation” under section 11(1) of the NDIS Act. A number of aspects of the heads of damage claimed by the Applicant in his legal proceedings are in the nature of supports that may be provided to a participant in the NDIS, including past and future gratuitous and commercially funded assistance, future management expenses and future pharmaceutical, travel, medical, rehabilitation, therapy, equipment and orthotic expenses. This is not to say that those will necessarily be funded, but the possibility of this is sufficient to satisfy the relevant criteria.
The Applicant contended that any CRA should be calculated as compensation of a judgment that satisfies rule 3.1(a) of the Compensation Rules. Compensation Rule 3.1 applied to cases where the person received compensation under a judgement or settlement in respect of the injury in which it is “possible to identify the NDIS component of the amount of compensation” and where the component is either “fixed by a non-consent judgement or is objectively identifiable (e.g., commutation of benefits under a statutory scheme)”.
The term “NDIS component” is defined in Compensation Rule 4.4 as follows:
NDIS component, of an amount of compensation under a judgement or settlement, means the component that relates to the provision of supports of a kind that may be funded or provided under the NDIS after the date of the judgement or settlement, and may include a component that consists of periodic payments.
It is the Applicant’s case that it is possible to identify the NDIS component of the compensation and that this component can be objectively identified. The Applicant submitted that his total claim for damages arising from the collision was just over $7.5 million and, of this, only $433,589.83 was claimed for “future pharmaceutical, travel, medical, rehabilitation, therapy, equipment and orthotic expenses”, part of which the NDIS supports.[13] He further submitted that his sanctioned settlement sum, of just over $4 million (plus future management fees, costs and statutory refunds), was 46.6545% of the total claim.[14] Therefore, using “simple mathematics”, the Applicant submitted that the objectively identifiable NDIS component was $202,289.60.[15] The Applicant had previously contended that the sum of $14,996.49 was the correct amount for the NDIS component as this was the amount identified as “future medical expenses” in a form filled out by his father on 12 March 2019 and provided to the Respondent.[16] The Tribunal notes that this form also identifies the sum of $2.825 million for future care and $273,650 for past care, which may also include NDIS components as they are defined in the NDIS Act.[17] The Applicant’s father had also informed the Respondent, by email dated 5 March 2021, that the sum of $137,500 from the sanctioned settlement was the NDIS component as this was the total of the future medical costs rehabilitation/NDIS costs paid in the settlement amount, although, again, set out (slightly different) final figures for past and future care elements of the sanctioned settlement.[18] The Tribunal accepts the explanation for these differing figures given by the Applicant’s father during the hearing, being that he had been engaged in the litigation process at certain critical times and that he had not always double-checked source documents before responding to the Agency. The Applicant’s father further submitted during the hearing that an NDIS component of nil was appropriate because the Applicant no longer had access to any compensation to be used for future NDIS supports. However, the fact that the Applicant (through his father) has formulated three or four different bases upon which the NDIS component may be calculated is consistent with the conclusion that the NDIS component is not readily to be identified, on any objective basis, from the lump sum received by the Applicant.
[13] Ibid.
[14] Ibid.
[15] Ibid.
[16] Exhibit 1, H25 Compensation Information Form dated 19 March 2019, 4.
[17] Ibid.
[18] Exhibit 1, H29 Email correspondence dated 5 March 2021.
In order for a fact to be objectively identifiable it must be capable of being identified without influence from personal beliefs or feelings, and not dependent upon the mind for its existence.[19] The opposite of objective is subjective, being a term used to describe a fact that exists in the mind of a person and depends on their personal beliefs or feelings.
[19] J.A. Simpson and E.S.C Weiner, The Oxford English Dictionary (Oxford University Press, 18th ed, 1989), “objective” (adjective).
The sanctioned settlement sum of just over $4 million was the result of a claim formulated on behalf of the Applicant, and the negotiated compromise of that claim. No amount is stipulated in the sanction for supports of the kind that may be funded by the NDIS. Further, it is not possible to extrapolate any such amount by looking at the initial claim and the settlement sum because the initial claim itself is entirely subjective. Counsel for the Respondent submitted, during the hearing, that it was proper to look at a claim as an assertion of entitlement and the Tribunal accepts this submission. The amounts claimed for various heads of damage come entirely from the minds, or beliefs, of the Applicant and those advising him, and could have been requested in any amounts depending on the subjective views of those people. There is no objective verification of what consideration, if any, may have been given to particular head of damage when the parties arrived at the ultimate sanctioned sum and when the Court determined it was appropriate to so sanction. The sum was received by the Applicant as an undissected lump sum and, as such, is to be treated as a whole.[20]
[20] McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381, [6].
As the sanctioned settlement sum does not fall within the parameters of Rule 3.1(a) of the Compensation Rules it follows, from the proper application of Compensation Rule 3.13, that the CRA is to be calculated by reference to Compensation Rules 3.13 and 3.14. Various deeming provisions apply in order to calculate the CRA, in a way that appears designed to achieve parity in the treatment of lump sum settlements receiving in personal injuries claims. The relevant provisions allow for a beneficial calculation of the CRA to take place if the deeming provisions result in a higher “subtotal” of assessable compensation than the calculation of lifetime cost arrived at by the scheme actuary, applying Compensation Rule 3.13(e), and using the applicable actuarial model published by the Respondent on its website at the time of the calculation (Compensation Rule 3.14).
In the Applicant’s case, that lifetime cost figure of $758,000 was so applied in the decision under review. The Respondent submits that the appropriate actuarial model was used, and this resulted in the more beneficial figure of $758,000 being correctly utilized in the CRA calculation provided on 10 May 2021.[21]
[21] Exhibit 1, H33 Compensation Reduction Amount – Outcome dated 10 May 2021.
The Applicant did not make any express submissions about the proper calculation of the compensation amount under Compensation Rules 3.13(e) and 3.14, other than to submit that, prior to the hearing, the Respondent had not provided adequate particulars of the amount and the mechanism for calculation of that figure. Certainly, prior to the hearing, the Respondent had not disclosed with sufficient particularity the variables and formula used to arrive at this aspect of the CRA calculation in order to assist the Tribunal in undertaking the review. As the Compensation Rules are designed to “specify how compensation payments… are to be taken into account by the CEO in determining the reasonable and necessary supports that will be funded or provided under the NDIS”[22] it is part of the Tribunal’s role in undertaking this review to ensure that the correct or preferable decision has been made with respect to the various aspects of the CRA calculation applied to the Applicant’s statement of participant supports.
[22] r 1.2 of the Compensation Rules.
The Tribunal ordered, pursuant to subsection 38(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘the AAT Act’), that after the conclusion of the hearing the Respondent was to lodge with the Tribunal an additional statement, containing further and better particulars in relation to the following material question of fact in this case, being the calculation of the sum of $758,000 arrived at under Compensation Rules 3.13(e) and 3.14.
The Respondent submitted, both during the hearing and in written submissions afterwards, that that in order to disclose the basis of the calculation of the sum of $758,000 it would be necessary to provide actuarial information that was sensitive and confidential in nature that, if disclosed, had the potential to impact on the financial sustainability of the NDIS. The Tribunal accepts this submission and considers that it is appropriate to limit the disclosure and publication of material showing the assumptions underlying the relevant calculation. The Applicant (through his father) was invited during the hearing, and agreed, to make an express undertaking to keep confidential the relevant information. He further indicated that he did not wish to make any further submissions on the issue of the calculation of this figure, having already addressed more broadly concerns about the application of the CRA to his funded supports. The Tribunal made an order, pursuant to section 35 of the AAT Act, prohibiting the publication or disclosure of the further information (or any part thereof) provided by the Respondent. The Tribunal notes that the Applicant (through his father) objected to this course on the basis that the information should be made publicly available. However, the Tribunal was persuaded that the confidential nature of the information justified the making of the order under section 35 of the AAT Act and note that it is imperative that the parties observe this order.
After this section 35 order had been made, and the confidentiality of the information appropriately protected, the Respondent produced documents containing substantial information about assumptions underlying the relevant calculation and detailing the three-staged process leading to the full actuarial calculation of the Applicant’s lifetime cost for the purpose of rule 3.13(e). The further information provided by the Respondent was sufficient to demonstrate to the Tribunal that the underlying assumptions had been correctly considered and calculated by the scheme actuary in order to arrive at the lifetime costs figure of $758,000.
In the circumstances, the Tribunal accepts that it is proper to calculate and apply the appropriate compensation reduction amount apply to the approved statement of participant supports and concludes that the methodology adopted by the Respondent is correct. Subject to the adjustment conceded by the Respondent with respect of supports directly funded by the Applicant, the Tribunal has reached the same view as that in the decision under review.
Therefore, the Tribunal sets aside the decision under review and remits this matter to the Respondent for reconsideration with the direction that the Compensation Rule 3.13(f) reduction is increased to $37,479.35, and the CRA is to be recalculated accordingly and otherwise calculated in accordance with the decision under review.
I certify that the preceding 25 (twenty-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member Buxton
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Associate
Dated: 11 April 2022
Date of hearing:
Date of final submissions:
16 March 2022
4 April 2022
Applicant’s Representative: Mr D. Whittaker Counsel for the Respondent: Mr J. Tito Solicitor for the Respondent: Ms Z. Harwood
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