Implications of the NDIS on personal injury compensation
14th Sep 2017
The purpose of this article is to alert lawyers practising in the personal injury field to the implications of the introduction of the National Disability Insurance Scheme (NDIS) on clients entitled to receive compensation for their injuries.
The NDIS provides reasonable and necessary supports to people with a disability around Australia who meet defined eligibility criteria. The NDIS began with a gradual rollout on 1 July 2013 and is expected to be fully implemented across Australia by 2019. The National Disability Insurance Agency (NDIA) is the independent statutory agency that has been set up to manage the scheme.
The NDIS is governed by the National Disability Insurance Scheme Act 2013 (Cth) (the Act) and allows for the making of Rules and Regulations. There have already been numerous Rules made under the Act which, together with Operational Guidelines, are intended to provide interpretive assistance.
The scheme is available to:
- Australian citizens (or holders of certain visas) aged 65 or less when they first apply to enter the scheme; and
- who have a permanent impairment that significantly affects their ability to take part in everyday activities; or
- who have a developmental delay.
The NDIA is intended to fund reasonable and necessary supports, including early intervention supports, for participants. The types of supports funded include mobility equipment, vehicle modifications, help with household tasks, transport, therapeutic support and workplace help. Section 34 of the Act sets out the relevant factors to consider in determining whether a support is reasonable and necessary. There have also been a number of cases already heard in the Administrative Appeals Tribunal which give examples on what will and will not be considered as reasonable and necessary.
There are specific rules for participants who may be eligible for or have received a compensation payment. Compensation is defined under s11 of the Act and includes a payment made (with or without an admission of liability) for injuries sustained in a motor vehicle accident, at work, through medical negligence or due to public liability.
Where a participant of the scheme receives compensation, the participant is required to repay to the NDIA amounts that the Authority has paid out related to the compensable injury (ss106 and 107 of the Act). Where the participant’s compensation has been reduced for contributory negligence, the repayment will be reduced by the same proportion. It is therefore important that settlement documents clearly reflect what portion, if any, of the settlement is reduced for contributory negligence.
Under s104 of the Act, the CEO of the NDIA can require a participant or prospective participant who may be entitled to compensation in respect of a personal injury, to take a specific action to enable them to obtain compensation. Failure to take this action can result in the participant’s plan being suspended, or the prospective participant’s plan not coming into effect.
In requiring a participant or prospective participant to take a certain action, the CEO must take into account a whole range of factors which are outlined under s104 of the Act. These factors are mainly related to the reason why the participant has not claimed compensation and the impact that requiring certain action to be taken will have on the participant and their family.
An interesting power related to this is that under s105 of the Act, the CEO of the NDIA can take action to obtain compensation or to take over the conduct of an existing claim for compensation in the name of the participant or prospective participant. They must give 28 days’ notice of their intention to do so.
If the NDIA takes action, or takes over a claim, they then become liable for the costs of and incidental to the claim and are thereby taking on the risk of litigation. Any settlement or judgment made as a result of a claim taken on or over by the CEO, is paid to the NDIA. The NDIA deduct the cost of the benefits paid to the participants, any costs of and incidental to the claim paid by the Agency, with the balance going to the participant or prospective participant.
It will be interesting to see how often this right is exercised by the NDIA as it creates an avenue where a person can obtain compensation for their injuries, without the risks, stress and upfront costs associated with litigation.
People who have already obtained compensation for their injuries may still be able to claim support under the NDIS in the future. Before approving funding, the NDIA must calculate the compensation reduction amount (CRA), based on the settlement or judgment figure. There are different rules for calculating the CRA which depend on whether the compensation was arrived at by settlement or judgment. These are outlined in Rule 3 of the Accounting for Compensation Rules.
The NDIS is complex, with the Act running for nearly 200 pages and numerous Rules and Operational Guidelines already published. It’s going to be a significant challenge for lawyers working in personal injury to ensure that they are up to date, however, I hope that ultimately the NDIS will be able to fulfil its purpose of helping Australians with a disability to get the care and support that they need.
Sarah is a Senior Associate at Mellor Olsson Lawyers in their Adelaide office, where she has worked for the last 11 years. She specialises in personal injury law, in particular medical negligence, motor vehicle accidents and public liability claims. Sarah is a committee member of the South Australian branch of the ALA.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).