How Can Compensation Entitlements Affect Your NDIS Support Package?

In 2013 the National Disability Insurance Scheme (“NDIS”) began rolling out across Australia, aimed at overhauling disability support and funding for over 400,000 people living with a disability. In this article, we will look at how personal injury compensation, for example TAC or WorkCover benefits, may affect NDIS support.

The NDIS is required to provide reasonable and necessary supports to eligible participants – meeting criteria that include age, citizenship and disability.

The scheme is not however, designed to remove the rights of people to make claims for compensation after they suffer an injury. Nor is it designed to replace their entitlements under other insurance and compensation systems.

So, a person who suffers an injury in a motor vehicle accident in Victoria will continue to make a claim for benefits and compensation related to that injury through the TAC or WorkCover, and not via the NDIS.

There will be some people who have rights and entitlements under both the NDIS and a compensation claim for medical negligence, public liability, or under an insurance scheme such as WorkCover or TAC.

1. A person can be prevented from getting access to the NDIS until they have sought compensation/benefits elsewhere.
2. Compensation can result in a payback of past NDIS benefits;
3. Compensation can result in a future reduction in the amount of NDIS benefits available.

Where the National Disability Insurance Agency (NDIA, the Commonwealth government agency responsible for the NDIS) believes that a participant or prospective participant may be entitled to seek compensation or benefits elsewhere, it can require a person to take “reasonable action” to claim or obtain compensation within a specified period of at least 28 days. This can be extended if the person requests additional time. “Reasonable action” has not been defined.

The Agency has to take a number of factors into account before directing a person to obtain compensation, and must also be satisfied that the claim for compensation has reasonable prospects of success.

A participant who already has an NDIS plan in place will have their plan (and any supports provided as part of it) suspended until the requested action has been taken.

If a person chooses not to pursue their compensation entitlements, the Agency also has the power to take action to claim compensation on behalf of a participant, in a process called “subrogation”. We are not aware of any cases to date where the Agency has used this power.

1. A person suffers major injuries in a motor vehicle accident in Victoria. They have a right to medical treatment and other benefits and compensation as part of a TAC claim, but instead they apply to the NDIS for support for their injuries. The NDIA directs the person to make a TAC claim for benefits before their NDIS entitlements can be pursued. The Agency’s direction is appealable, but might well be considered reasonable because:

Establishing an entitlement to TAC benefits is generally a straightforward process, and within a short period of time any entitlement to supports should be well known.

2. This can be compared with a person who lives with significant disabilities after medical treatment. Whether or not they have a claim for medical negligence is not known. While they can engage a specialist injury lawyer to investigate a potential claim on a No Win No Fee basis, establishing whether they are entitled to compensation is not a quick or simple process. In a case like this, the Agency is unlikely to withhold NDIS entitlements while directing a person to obtain compensation.

The NDIS Act gives the Agency the power to recover the cost of supports that have been funded by the NDIS before a claim for compensation is settled or determined in a court (“the recoverable amount”).
Amounts received under the NDIS prior to the settlement of a common law claim for compensation would be repaid from that compensation; a process which commonly occurs in relation to other government agencies such as Medicare and Centrelink.

Although the NDIA’s entitlement under the law to have money repaid from compensation is clear, in practice, it has had some difficulties in establishing its entitlement to repayment.

In the case of Sharp v Home Care Service of NSW [2018] NSWSC 1319, a court was required to consider a request for approval of a compensation claim, after a woman with cerebral palsy suffered burns while she was being showered in a residential care facility. She made a claim for compensation in relation to the burns.

The NDIA initially sought repayment from the subsequent compensation, for supports provided by them in the amount of $34,000. Later it claimed $136,000, and then later still $106,000. In making its decision the court noted this uncertainty with disapproval.

Ultimately the court determined that the supports provided by the NDIA were not in relation to the plaintiff’s burns but instead, were provided in relation to her cerebral palsy, and as a result, no supports were repayable from the compensation.

And in another similar case, the court suggested that as a result of the inability of the Agency to identify how much should be repaid to it from compensation, it should waive any entitlement:

“I note that AB has been a participant in the National Disability Insurance Scheme (“NDIS”) since July 2017. There is, on the face of it, an open question as to whether the NDIS will make any claim to recover monies as a result of this settlement. It would seem that the NDIS has not and, in practice, will not provide a committed position, at this point, in that regard.

Although it is a matter for the NDIS and not the Court, having considered all the material before the Court on this application, I consider it would be highly undesirable if the NDIS were to seek to make any claim arising from this settlement. If it is of any assistance to the Plaintiff, in the process being undertaken before the Court, I am content for what I am presently saying to be communicated to the NDIS, so that it can be taken into account.”

Calculating the amount repayable can be complex, but here are some general principles:

• Usually, there will be no amount repayable to the NDIA in relation to a TAC or WorkCover claim because a claim for compensation under those schemes does not include compensation for the types of supports which overlap with the supports provided by the NDIS. Also, medical and like benefits will have been paid along the way by the TAC or Workcover insurer;
• The amount repayable to the NDIS cannot be greater than the net compensation amounts payable to a person;
• If a person’s compensation is reduced (say because the person contributed to the accident occurring) the amount repayable to the NDIS is also reduced;
• The Agency can write to a defendant’s insurer putting them on notice that amounts might need to be repaid from compensation; and
• The Agency can exercise discretion to reduce or waive its entitlement to repayment from compensation in certain circumstances.

Under Section 35(4) of the NDIS Act, the NDIS Rules may prescribe methods and criteria regarding how to take into account lump sum compensation payments that do and do not specifically include amounts for the cost of supports.

The way that the NDIA reviews compensation and its impact on future NDIS supports revolves around a Compensation Reduction Amount (“a CRA”).

The CRA is an amount the NDIA can reduce a participant’s funding for reasonable and necessary supports to account for compensation being received. The CRA reduces the participant’s entitlement to funding for reasonable and necessary supports.

The method for calculating the CRA is very complex, and depends on a number of factors relating to the compensation claim.

Despite this, there are a few key principles which are important to keep in mind when thinking about the impact of compensation on future entitlements to NDIS supports:

• The CRA generally produces a yearly reduction amount from your NDIS support package;
• NDIS supports are only reduced if the compensation you received included compensation for the types of supports and benefits payable by the NDIS. So, for instance, if your compensation claim is only for pain and suffering and/or income loss (as is the case in almost all TAC and workers compensation claims), you would not have a reduction in NDIS supports;
• The reduction cannot be more than the total value of the supports. So you don’t have a situation where your reduction amount is $100,000 and your supports are only $90,000;
• Future NDIS supports can be reduced using the CRA method even if the person was not an NDIS participant at the time of their compensation payout;
• If your circumstances change (say because your compensation is spent or used more quickly than anticipated), you can apply to the NDIS to recalculate the CRA based on the new circumstances.

For anyone wondering how the Agency can establish what other benefits or compensation a person might be entitled to, the law provides the Agency with the power to require documents to be provided.

This means that the NDIA can require a person to provide documents that might be relevant to the supports which should be provided under the NDIS. For example, if a person has documents confirming that their medical and like expenses are being paid by the TAC, they can be required to provide that information to the Agency and can be penalised for failing to provide that information.

This is clearly a highly specialised and complex area. If you’re a current or potential NDIS participant seeking compensation, you should get advice from a team of personal injury specialists regarding your circumstances to ensure that you maximise your entitlements and supports.