Common Statutory refunds in NSW Institutional Abuse matters

Civil compensation claims allow survivors of abuse to seek a variety of damages including pain and suffering, economic loss, care and assistance and out of pocket expenses.

These damages form the basis of any settlement offer/award made to an injured claimant. However, the value of these damages will have little practical relevance to an injured claimant unless they understand the deductions that apply to same resulting from statutory refunds/debts and their legal costs.

The purpose of this document is to identify the common statutory refunds and/or debts that may affect claimants who make civil compensation claims in institutional abuse matters in NSW. The most common types of statutory refunds applying to these claims are Medicare, private health insurance, Centrelink and Victims Services. Generally, these organisations have provided a benefit to the claimant (by way of financial support payments, rehabilitation/retraining and/or travel costs) for the injuries that are the subject of their compensation claim.

It should also be noted that government departments may utilise notification of a successful compensation claim to try and recover funds owed to them by way of debts unrelated to the injuries that are the subject of the claim, such as a child support or taxation debts. The key difference being a refund is only repayable in the event of a successful compensation claim whilst a debt remains payable irrelevant of whether the injured claimant ever makes a compensation claim.

A compensation payer has statutory obligations to notify Centrelink and Medicare following resolution of a claim and to attend to payment of these refunds prior to releasing the remaining settlement funds to the claimant.

Private Health Insurance

A private health insurer is entitled to recover the cost of benefits paid towards the rehabilitation of a claimant’s compensable injuries.

A claimant’s solicitor will notify the insurer of the fact that there is current compensation claim and seek a statement detailing the times they have received a benefit under the policy.  Once received, the claimant will identify the services on the statement that relate to the injuries that are the subject of the claim.

After receipt of the claimant’s completed statement, the insurer will issue a charge confirming the amount that will be repayable upon resolution of the claim.

Claimants should also take care to understand the effect of their compensation claim upon future benefits under the policy. Private health insurance policies represent a contract between the claimant and the insurer. The terms of these policies are not uniform. The claimant should liaise with their insurer to understand whether they will be precluded from receiving further benefits from the policy for the compensable injuries after resolution of their compensation claim.

Victims of Crime Compensation and Restitution Payments

If a claimant has received a Victim’s Recognition or Financial Support Payment for the abuse and injuries that are the subject of their civil claim, there will be a refund payable to the Department of Victim Services upon resolution of their claim.

In some cases, a claimant may have been convicted of a criminal offence which has caused their victim/s an injury for which they have received a victim support payment.

A victim support payment to a claimant only becomes repayable in the event of a compensation claim, however if they have been convicted of an offence causing their victim to receive a victim support payment, same is a debt and remains repayable irrelevant of whether a compensation claim is ever pursued.

Centrelink

The Social Security Act (“the Act”) governs the Commonwealth’s entitlement to recover a portion of Centrelink benefits previously paid to an injured claimant when they receive an amount of lump sum compensation.  A refund will be payable to Centrelink in circumstances where a claimant’s settlement amount includes a component for economic loss.

A claimant may also be precluded from receiving benefits (such as financial support payments and use of a concession card) for a certain period of time after receipt of their compensation.  This is known as a ‘Preclusion Period‘.

Centrelink will recover the total of ‘Compensation Affected Payments‘ made to a claimant during their ‘lump sum preclusion period‘. The preclusion period will vary for each claimant as the formula is based upon the settlement sum and whether they have received periodic compensation payments or lump sum compensation or some combination of both. A large number of Centrelink payments are ‘Compensation Affected‘ including Age and Disability Pensions, Newstart, Parenting Payment, Carer Payment and Sickness Benefits.

A compensation payer is obligated to notify Centrelink of a matter’s resolution within 28 days of same. In time, Centrelink will issue a Recovery Notice which will specify the amount the compensation payer is liable to repay from the settlement amount.

It should be noted that Centrelink utilises their own formula to calculate their charge amount. Whilst there are various online calculators that purport to confirm Centrelink’s charge, they do not always reflect reality. The only time the amount of Centrelink’s interest will be certain is upon receipt of their charge after resolution of the matter.

Medicare

Medicare’s entitlement to seek recovery of previously paid benefits in a compensation claim is governed by the Health and Other Services (Compensation) Act 1995.  

Medicare is entitled to recover the costs of past benefits (arising from medical expenses) paid to an injured claimant for their compensable injuries when they receive compensation in excess of $5,000. They must be notified of resolution of a claim by the compensation payer within 28 days of same.

In order to determine Medicare’s recoverable charge amount, the claimant’s solicitor will request a Claims History Statement after lodgement of a claim. Medicare will then issue a Claims History Statement which details the times that the claimant has utilised their card to receive Medicare benefits. The claimant will then need to tick the services on the Statement that apply to the injuries that are the subject of their compensation claim.

Medicare will issue a document entitled ‘Notice of Past Benefits‘ within 28 days of receiving the claimant’s correctly completed Claims History Statement. The Notice of Past Benefits (Deemed or otherwise) remains valid for a period of 6 months. Once the matter resolves, the Notice of Past Benefits becomes a Notice of Charge which the compensation payer is responsible for paying from the settlement sum.

Do you need help?

We recognise that survivors of childhood abuse are strong individuals who deserve the right to seek compensation for the harm they have suffered. We also understand that it can be difficult to know which pathway is the right one to choose. It is important to speak with a lawyer who is experienced in institutional abuse matters prior to accepting any offer of settlement.

Turner Freeman has a number of lawyers located throughout Australia with experience in institutional abuse. We invite survivors to contact our Sydney office on (02) 8222 3333 for a confidential and obligation free discussion to help inform them as to their rights and legal options.