Operational Guideline Compensation Recovery of NDIS Amounts Compensation Not Received But

Operational Guideline – Compensation – Recovery of NDISAmounts – Compensation not Received but Action Commenced

Legislation

1.Read ss.4, 99 and 109 to 115 of the National Disability Insurance Scheme Act 2013(NDIS Act).

2.This Operational Guideline is consistent with the law as in effect on 9 December 2013.

General principles

1.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.

2.People with disability should be supported to receive reasonable and necessary supports, including early intervention supports.

See s.4(5) of the NDIS Act.

3.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.

4.The financial sustainability of the NDIS should be ensured.

See s.4(17)(b) of the NDIS Act.

Background

5.This Operational Guideline deals with the recovery of money by the National Disability Insurance Agency (NDIA) where a participant has not yet received compensation but has:

a.Made a compensation claim against another person, or

b.Made a compensation claim against an insurer (which, under the NDIS Act, includes a state or territory authority,

in respect of a personal injury that has caused, to any extent, their impairment.

6.In circumstances where a participant has made a compensation claim against another person:

a.Table 1 sets out the criteria a delegate is to apply in determining whether to issue a preliminary notice, and

b.Table 3 sets out the criteria a delegate is to apply in determining whether to issue a recovery notice.

7.In circumstances where a participant has made a compensation claim against an insurer (which includes a state or territory authority):

a.Table 2 sets out the criteria a delegate is to apply in determining whether to issue a preliminary notice, and

b.Table 4 sets out the criteria a delegate is to apply in determining whether to issue a recovery notice.

8.The NDIS Act establishes a two-stage process for the recovery of NDIS amounts in circumstances where a participant has commenced action but has not yet received compensation:

a.A preliminary notice may be issued, giving written notice to another person or an insurer that the delegate may wish to recover an amount from the person or insurer, and

b.Arecovery notice is to be issued, giving written notice to another person or an insurer that the delegate proposes to recover an amount from the person or insurer.

9.Generally, a preliminary notice will be issued by a delegate before they issue a recovery notice. However, the NDIS Act does not require that to be done and there may be circumstances that warrant a recovery notice being issued without a preliminary notice having previously been issued. Delegates should consider NDIA policy and consult their supervisor or the Legal Services Branch when considering whether to issue a recovery notice at first instance.

Step 1 – Issuing a preliminary notice

General rules

10.A preliminary notice can be issued in respect of both a participant and a prospective participant and is a written notice issued by a delegate to another person or an insurer stating that:

a.The delegate may wish to recover an amount from the person or insurer (ss.109(1) and 109(2))

b.The person or insurer has an obligation to notify the NDIA in writing that they are liable to pay compensation within 7 days of (ss.109(3) and 110):

i.Either receiving the notice, or

ii.Becoming liable to pay compensation

c.Failure to comply with the obligation to notify the NDIA is a criminal offence (s.110), and

d.The CEO may later give the person or insurer a recovery notice proposing to recover a specified amount (ss.109(3) and 111).

11.Upon receiving a preliminary notice, the person or insurer is required to notify the NDIA in writing of their liability to pay compensation (s.110):

a.If the person or insurer was liable to pay compensation when they received the notice – within 7 days of receiving the notice, or

b.If the person or insurer becomes liable to pay compensation after they receive the notice – within 7 days of becoming liable to pay compensation.

12.The person or insurer commits an offence if they do not comply with this notification requirement (s.110). The offence is punishable by 12 months imprisonment or a fine of 60 penalty units, which in 2013 totals $10,200.

13.If a preliminary notice has been issued, the person or insurer who received the notice is not liable to pay the compensation or indemnity to any person other than the NDIA while the notice is in effect (s.112). The person or insurer commits an offence if they pay compensation to the participant after receiving a preliminary notice, unless (s.114):

a.A delegate has revoked the preliminary notice in writing

b.The person or insurer has paid the NDIA the amount specified in a recovery notice, or

c.A delegate has given the person or insurer written permission to pay the amount to the participant.

14.If a person or insurer is convicted of an offence, the person or insurer is also liable to pay an amount determined by the delegate to the NDIA. The amount determined by the delegate must not be more than the amount that would have been specified under a recovery notice if one had been issued (s.115).

Table 1: When a delegate can issue a preliminary notice to another person – s.109(1)

Requirements / Considerations (including evidence relied on and established facts)
A delegate may issue a written notice (a preliminary notice) to another person (the potential compensation payer) if Criteria 1 and 2 are met:
Criterion 1
A participant, or prospective participant, makes a claim against the potential compensation payer for compensation. /  Yes
No
Criterion 2
The claim relates to the participant’s, or prospective participant’s, impairment. / Yes
No
Were both of Criteria 1 and 2 met? / Yes
No
If yes, the delegate may issue a preliminary notice to the potential compensation payer stating that the delegate may wish to recover an amount from the potential compensation payer.
Note that this is a discretionary decision and the NDIS Act does not require delegates to issue preliminary notices in every case. Delegates should consider NDIA policy and consult their supervisor or the Legal Services Branch when considering whether to issue a notice.

Table 2: When a delegate can issue a preliminary notice to an insurer – s.109(2)

Requirements / Considerations (including evidence relied on and established facts)
A delegate may issue a written notice (a preliminary notice) to an insurer if Criteria 1, 2 and 3 are met:
Criterion 1
A participant, or prospective participant, makes a claim against another person (the potential compensation payer) for compensation. /  Yes
 No
Criterion 2
The claim relates to the participant’s, or prospective participant’s, impairment. / Yes
No
Criterion 3
An insurer may be liable, under a contract of insurance, to indemnify the potential compensation payer against any liability arising from the claim for compensation. / Yes
No
Were all of Criteria 1, 2 and 3 met? / Yes
No
If yes, the delegate may issue a preliminary notice to the insurer stating that the delegate may wish to recover an amount from the insurer.
Note that this is a discretionary decision and the NDIS Act does not require delegates to issue preliminary notices in every case. Delegates should consider NDIA policy and consult their supervisor or the Legal Services Branch when considering whether to issue a notice.

Step 2 – Issuing a recovery notice

General rules

15.A recovery notice can only be issued in relation to a participant (and not a prospective participant) and is a written notice issued by a delegate to another person or an insurer stating that:

a.The delegate proposes to recover an amount from the person or insurer (ss.111(1) and 111(2)), and

b.The person or insurer commits an offence if they pay compensation to the participant (rather than the NDIA) after receiving a recovery notice unless (s.114):

i.The person or insurer has paid to the NDIA the amount specified in the notice, or

ii.A delegate has given the person or insurer written permission to pay the amount to the participant.

16.If a recovery notice has been issued by a delegate, the person or insurer who received the notice is not liable to pay the compensation or indemnity to any person other than the NDIA while the notice is in effect (s.112).

17.The person or insurer commits an offence if they do not comply with that requirement to not pay the participant after a recovery notice has been issued (s.114). The offence is punishable by 12 months imprisonment or a fine of 60 penalty units, which in 2013 totals $10,200. If the person or insurer is convicted of an offence, they are also liable to pay the amount specified in the recovery notice (s.115).

18.The amount to be specified in the recovery notice is the lesser of the following (s.111(4)):

a.An amount equal to the sum of the NDIS amounts that have been paid to any person in respect of the participant’s impairment, or

b.If before the notice was issued, the participant’s claim has led to a judgement by a court (whether by consent or not) or to a settlement – an amount equal to the recoverable amount worked out under ss.106(2) or 107(2) and the relevant operational guideline.

19.If the recovery notice does not specify the correct amount to be recovered, the recovery notice may be legally ineffective and not lead to the recovery of NDIS amounts.

20.When a person or insurer pays the NDIA after receiving a recovery notice, the payment discharges (s.113):

a.The insurer’s liability to the indemnified person (if applicable)

b.The person’s liability to the participant, and

c.The participant’s liability to the NDIA.

21.A decision to issue a recovery notice is a decision that is reviewable internally and then by the AAT (s.99(p)). A statement of reasons is to be drafted when making the decision.

Table 3: When a delegate can issue a recovery notice to another person – s.111(1)

Requirements / Considerations (including evidence relied on and established facts)
A delegate may issue a written notice (a recovery notice) to another person (the compensation payer) if Criteria 1 and 2 are met:
Criterion 1
One or more NDIS amounts have been paid to a person in respect of a participant’s impairment.
Note: NDIS amounts means an amount paid under the NDIS in relation to reasonable and necessary supports funded under a participant’s plan. /  Yes
No
Criterion 2
The compensation payer either:
1.Is liable to pay compensation to the participant, or
2.If the compensation payer is a state or territory authority – has determined that a payment by way of compensation is to be made to the participant,
in relation to the impairment. / Yes
No
Were both of Criteria 1 and 2 met? / Yes
No
If yes, the delegate may issue a recovery notice to the compensation payer setting out the amount the delegate proposes to recover from the compensation payer.
If a compensation payer is given a recovery notice, the compensation payer is liable to pay the NDIA the amount specified in the notice and the specified amount becomes a debt due to the NDIA (ss.111(3) and 111(7)).
Notethat this is a discretionary decision and the NDIS Actdoes not require delegates to issue preliminary notices in every case. Delegates should consider NDIA policy and consult their supervisor the Legal Services Branch when considering whether to issue a notice.

Table 4: When can a delegate issue a recovery notice to an insurer – s.111(2)

Requirements / Considerations (including evidence relied on and established facts)
A delegate may issue a written notice (a recovery notice) to an insurer if Criteria 1 and 2 are met:
Criterion 1
One or more NDIS amounts have been paid to a person in respect of a participant’s impairment.
Note:NDIS amounts means an amount paid under the NDIS in relation to reasonable and necessary supports funded under a participant’s plan. /  Yes
No
Criterion 2
An insurer is liable, under a contract of insurance, to indemnify the person against whom the participant, or prospective participant, has made a claim for any liability arising from a claim for compensation. / Yes
No
Were both of Criteria 1 and 2 met? / Yes
No
If yes, the delegate may issue a recovery notice to the insurer setting out the amount the delegate proposes to recover from the insurer.
If an insurer is given a recovery notice, the insurer is liable to pay the NDIA the amount specified in the notice and the specified amount becomes a debt due to the NDIA (ss.111(3) and 111(7)).
Notethat this is a discretionary decision and the NDIS Actdoes not require delegates to issue preliminary notices in every case. Delegates should consider NDIA policy and consult their supervisor or the Legal Services Branch when considering whether to issue a notice.

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Operational Guideline – Compensation – Recovery of NDIS Amounts – Compensation not Received but Action Commenced(v 1.0)

Publication date: 9 December 2013