Operational Guideline – Compensation –
Overview
Legislation
1.
Read ss.11 and 104 to 116 of the National Disability Insurance Scheme Act 2013 (NDIS Act) and
the National Disability Insurance Scheme (Supports for Participants – Accounting for
Compensation) Rules 2013 (Supports for Participants – Accounting for Compensation Rules).
General principles
2.
People with disability and their families and carers should have certainty that people with disability
will receive the care and support they need over their lifetime.
See s.4(3) of the NDIS Act.
3.
People with disability should be supported to receive reasonable and necessary supports, including
early intervention supports.
See s.4(5) of the NDIS Act.
4.
People with disability should be supported to receive supports outside the National Disability
Insurance Scheme (NDIS), and be assisted to coordinate these supports with the supports
provided under the NDIS.
See s.4(14) of the NDIS Act.
5.
The financial sustainability of the NDIS should be ensured.
See s.4(17)(b) of the NDIS Act.
What is compensation?
6.
‘Compensation’ is defined in s.11 of the NDIS Act to mean:
(1)
In this Act:
compensation means a payment (with or without admission of liability) in respect of:
(a)
compensation or damages in respect of personal injury; or
(b)
personal injury, under a scheme of insurance or compensation under a Commonwealth,
State or Territory law, including a payment under a contract entered into under such a
scheme, or
(c)
personal injury, in settlement of a claim for damages or a claim under such an insurance
scheme;
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). It does not matter whether the payment is made directly to the
person who sustained the personal injury or to another person in respect of that person.
(2)
A payment referred to in subsection (1) may be:
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7.
(a)
in the form of a lump sum or in the form of a series of periodic payments, and
(b)
made within or outside Australia.
A person may be injured in various ways that may result in the person receiving compensation.
Examples are work injuries (where workers’ compensation is usually available), motor vehicle
accidents (where an insurer may be liable to compensate an injured person) and medical
negligence. An injury caused by an event like a fall in a public place may result in compensation
paid on behalf of the responsible party by an insurer under a public liability insurance policy.
Forms of compensation awards
8.
A compensation award can take any of a number of forms. These include a lump sum payment
(although these are reducing in importance) or a structured settlement resulting in periodic
payments made on a regular basis. The award may be made as a result of court action although,
again, states and territories have been trying to limit access to courts because of the expense and
delay involved in litigation. Compensation can be paid on a periodic basis either following a court
action or as a result of an application made to a state scheme such as Victoria’s Transport Accident
Scheme.
9.
The National Disability Insurance Agency (NDIA) needs to examine compensation awards made by
courts or settled as between the parties to see whether they itemise the items for which
compensation is paid and to see if the items are costed. Often there is no itemisation and it is
unclear how to determine the portion for supports. The Supports for Participants – Accounting for
Compensation Rules provide a method for this. It is also covered in Operational Guidelines where
relevant.
The way compensation is treated
10. The NDIS is designed to complement, not replace, existing compensation arrangements for
personal injury.
11. The NDIS Act and Supports for Participants – Accounting for Compensation Rules are about
ensuring that when a person receives, or is entitled to receive, compensation payments the NDIA:
a.
Recovers NDIS amounts paid to a participant where compensation has been paid, or will be
paid, for the same supports, and
b.
Ensures that the reasonable and necessary supports stated in a participant’s plan are reduced
to take account of the compensation payments received, or given up, by a person.
12. There are six other Operational Guidelines that deal with compensation in more detail. Three deal
with the recovery of NDIS amounts and three deal with revising a participant’s plan and reducing
the supports. These Operational Guidelines are:
a.
Operational Guideline – Compensation – Recovery of NDIS Amounts – Action has not Been
Commenced to Recover Compensation
b.
Operational Guideline – Compensation – Recovery of NDIS Amounts – Compensation not
Received but Action Commenced
c.
Operational Guideline – Compensation – Recovery of NDIS Amounts – Compensation
Received under a Judgement or Settlement
d.
Operational Guideline – Compensation – Revise the Plan and Reduce the Supports –
Compensation Received Under an Insurance Scheme or a Commonwealth, State or Territory
Scheme
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e.
Operational Guideline – Compensation – Revise the Plan and Reduce the Supports –
Agreement to Give Up Compensation, and
f.
Operational Guideline – Compensation – Revise the Plan and Reduce the Supports –
Compensation Received under a Judgement or Settlement.
13. Note that amounts paid to a participant or prospective participant from a personal insurance policy
taken out for the benefit of that person are not taken into account as compensation for the purposes
of the NDIS Act. These policies cover people for such matters as loss of income when the person
loses a job, outstanding credit card or other debts when a person dies, becomes ill or is
unemployed. They can also be in the form of health or accident insurance payments. The
common factor in all of these is that there is no party involved other than the participant or
prospective participant and the insurance company. There is no employer, other driver, person
committing an assault on the person, or any other similar party responsible for injuring the
participant or prospective participant.
Compensation reduction amount
14. Implementing paragraph 11.b above, that is reducing reasonable and necessary supports to take
account of compensation entitlements, requires calculating a ‘compensation reduction amount’.
This is the amount that is deducted from the costs of reasonable and necessary supports approved
for a participant.
15. The Supports for Participants – Accounting for Compensation Rules and each of the Operational
Guidelines on compensation explain how to calculate the compensation reduction amount.
Allowing for particular issues affecting the
compensation
16. Each of the issues described below is the subject of special provisions in the six specific
Operational Guidelines noted in paragraph 12 above.
Two or more compensation awards
17. Occasionally compensation can be provided from several sources, all relating to an original injury.
For example, an injured person may claim for personal injury arising from a motor vehicle accident
involving multiple vehicles. The injury may have been caused by two liable people. The person
may settle with one liable person and receive a judgment from a court against the other liable
person. The compensation reduction amount is to be worked out by adding together the two
compensation reduction amounts applying to each compensation award. In deciding the level of
reasonable and necessary supports to be provided to the participant, the NDIA will take account of
both compensation reduction amounts.
Where a participant has paid for supports pending receipt of
compensation
18. In the Operational Guidelines where a compensation reduction amount is being calculated notice is
taken of the situation where, pending receipt of compensation, the participant has paid for supports
himself or herself and those are supports normally provided by the NDIS. These amounts are
deducted from the compensation reduction amount as it is beneficial to the participant to have as
low a compensation reduction amount as possible.
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Where a participant has had several plans between the time of an
injury and the receipt of compensation
19. Most NDIS plans operate for a year or less before they are reviewed. Where a plan is being
devised and it follows one or more earlier plans where a compensation reduction amount was
applied, the earlier amounts are deducted from the new total to give credit for the amounts already
credited to the NDIA. Again, a lower compensation reduction amount is beneficial for the
participant.
Contributory negligence
20. Where the compensation received by a participant has been reduced because of contributory
negligence by the participant the compensation reduction amount is reduced by the same
proportion as applied in reducing the size of the award.
Repayment to Department of Human Services, Department of Health,
etc
21. In a number of the other Operational Guidelines on compensation the compensation reduction
amount is reduced by amounts that have been paid to the Department of Human Services and the
Department of Health from the compensation. These amounts are payable under various Acts of
Parliament. They are to repay amounts spent on supporting the participant through social security
payments, payment of medical bills, etc following the injury but before the compensation is paid.
These are amounts that are properly paid as part of compensation so it is logical that the entities
which have provided the immediate support are reimbursed from the compensation payment.
Recognition that the participant does not receive or retain these amounts as part of his or her
compensation means that the amounts are deducted from the compensation amount taken into
account by the NDIA in assessing the compensation reduction amount. This results in a lower
compensation reduction amount, and more generous supports from the NDIA than if these
amounts were not deducted from the compensation award.
Advice to participant
22. A person who has suffered an injury and is considering a compensation settlement or other
agreement that might be relevant to the NDIS may seek advice from the NDIA on the likely
compensation reduction amount that would apply to the settlement or agreement.
23. No action lies against the NDIA or any officer in respect of advice given as outlined above.
See rs.3.8 and 3.9 of the Supports for Participants – Accounting for Compensation Rules.
Obtaining the required information
24. A planner who is dealing with a prospective participant or participant with a compensation award or
entitlement should ask the person the following questions in order to obtain the basic information
required to assess the effect of the compensation on reasonable and necessary supports.
25. Where compensation may have been awarded in the past the questions are:
a.
Have you received compensation?
b.
If the answer to (a) is ‘yes’, what event or injury occurred to bring about the compensation
payment or payments?
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c.
When was the compensation paid, or if paid by way of regular payments, when did these
start?
d.
How much was the compensation or, if paid on a regular basis, how much is paid and how
frequently?
e.
What papers can you provide describing the compensation and what it covers?
f.
If you have no papers would there be a lawyer or other person who knows about the
compensation? If so, would you be prepared to sign a paper asking the lawyer or other
person to assist you by answering our questions and requests?
g.
If there are no papers and no lawyer or other person involved, what did you understand the
compensation to cover? How was it supposed to be used?
h.
If the compensation was paid as a lump sum what has become of the funds? How have they
been spent? How was the money invested?
i.
Have Centrelink or any other organisation taken your compensation into account to reduce or
suspend any social security or other government payments you would have otherwise been
paid or to require a repayment of any kind?
j.
Have you yourself paid for any supports or services because of your accident?
26. Where compensation has not yet been claimed the questions are:
a.
What event or injury occurred to bring about the possible compensation payment?
b.
What steps, if any, have you taken to obtain compensation?
c.
If no steps have been taken as yet do you intend to claim?
d.
If the answer to (c) is that the prospective participant or participant does not know, ask ‘Do you
need more information in order to make a decision or would you rather just not pursue the
matter?’
e.
If the answer to (c) is ‘no’, ask ‘Why do you not intend to claim?’
f.
If the matter is in the hands of a lawyer or other person will you sign an authority that allows
the NDIA to discuss the matter with them?
g.
If the reason for not claiming is an agreement between the prospective participant or
participant and another person where the prospective participant or participant agrees to not
claim, refer to Operational Guideline – Compensation – Recovery of NDIS Amounts – Action
has not been Commenced to Recover Compensation and assess whether it was reasonable
for the prospective participant or participant to enter into the agreement.
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