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Accident Compensation Cases

Social Security Appeal Authority Decision No 094/05 (SSAA, 19/09/05)

Judgment Text

DECISION 
Ms M Wallace - Chairperson, Ms P McKelvey - Member, Mrs H Tukukino - Member
Introduction 
[1]
The appellant appeals against a decision of the Chief Executive upheld by a Benefits Review Committee to establish and recover overpayments of $48,933.39 in respect of Invalid's Benefit paid to the appellant during the period 11 December 2000 to 1 April 2004 and to recover the overpayment from a payment of backdated earnings related compensation from the Accident Compensation Corporation. 
[2]
In particular the appellant disputes the recovery of $24,465.84 relating to benefit paid to her husband from the ACC payment by the Chief Executive. 
Background 
[3]
The appeal in this case has been lodged by ******* ******* (Mrs *******). Mrs ******* is married to ******* ******* (Mr *******). Since 11 December 2000 she has been included as a dependent spouse in the Invalid's Benefit paid to her husband. 
[4]
In fact Mrs ******* has been assessed as qualifying for Invalid's Benefit in her own right, however the rate of benefit payable is the same whether the appellant is included in her husband's benefit or is paid a benefit in her own right and we have been told it is the practice of the Ministry to grant separate benefits to a married couple only where that would result in some particular advantage to the couple such as the ability to apply for Training Incentive Allowance. 
[5]
In accordance with the apportionment provisions of the Social Security Act 1964 the appellant and her husband have each received 50% of the benefit payable to Mr *******. 
[6]
On or about 5 July 2004 the Ministry received advice from the Accident Compensation Corporation (ACC) that the appellant had established entitlement to backdated earnings related compensation in respect of the period 14 March 1999 to 1 April 2004. As a result of this advice the Ministry advised ACC that it would require reimbursement of benefit from 11 December 2000 to 1 April 2004. 
[7]
ACC advised the Ministry of the appellant's entitlement to ACC. The Ministry carried out an assessment of the appellant's entitlement to benefit based on the deduction regime contained in s 71A of the Social Security Act 1964. Initially it was calculated that $24,537.42 was owed by Mr ******* and $24,539.17 was owed by Mrs *******. This assessment was in respect of Invalid's Benefit. No overpayment in respect of Disability Allowance, Accommodation Supplement and Special Benefit was established. 
[8]
On 10 August 2004 ACC reimbursed the sum of $49,076.59 to the Ministry. On the same date Mrs ******* was advised of the transaction which had taken place between ACC and the Ministry. She was advised of her right to review the decision to deduct the amount owing in respect of overpaid benefit from arrears of compensation payable. 
[9]
The appellant sought a review of decision. The decision was reviewed internally which resulted in a reduction in the total overpayment to $48,933.39. The matter was then referred to a Benefits Review Committee. The Benefits Review Committee upheld the decision of the Chief Executive. The appellant then appealed to this Authority. 
[10]
The appellant explained in evidence that she had been in employment in 1995 when an injury resulted in her applying for ACC. ACC had wanted her off weekly earnings related compensation payments and she had taken up employment as a result. She was supposed to receive a top up from ACC to bring her income up to a certain level. Eventually she was unable to continue working. She ceased work and sought a review of the ACC decision to cancel her earnings related compensation. Eventually her appeal was upheld. 
[11]
The appellant said that following the decision that she should be reimbursed arrears of ACC the arrears were paid by ACC to the Ministry of Social Development with little or no reference to her. Indeed she had asked ACC to hold the payment while she sought legal advice. The appellant said that after tax had been paid she had only received approximately $3,000 arrears in respect of ACC. Whilst she had not used a lawyer to represent her in relation to the review hearing, she and her husband had incurred the cost of travelling to and from ******* to obtain the reversal of the Corporation's original decision to stop her ACC payments. 
[12]
The appellant noted that she and her husband have no substantial assets. They have a debt of $25,000 which is secured by way of an insurance policy. The appellant said that she had paid $30,000 for private surgery in relation to her injury. ACC only paid a percentage of this cost and she was left with a $10,000 shortfall. This debt was included in the $25,000. 
[13]
Mr ******* noted that he is a ******* and over the past 12 months he has had as many as 23 operations to remove skin cancers. The appellants said that they were in a desperate financial position. 
[14]
Mr and Mrs ******* noted that they would have preferred to repay the overpayment by regular weekly deductions of $5-$20 per week if the money had to be repaid. 
[15]
On behalf of the appellant Mr ******* made the following submissions: 
[a]
The appellant was entitled to Invalid's Benefit in her own right from 13 February 2002 and had this benefit been actioned then the appellant and her husband would have been independently entitled to benefits. 
[b]
Regardless of whether one benefit was granted or two benefits were granted, s 71A does not authorise the deduction of Mr *******'s benefit from the appellant's weekly compensation. 
[c]
Section 71A has been interpreted incorrectly. Section 71A applies where one beneficiary receives both weekly compensation payments and a benefit in which case the benefit received under the Social Security Act 1964 is to be “reduced by the amount of compensation paid to a beneficiary”. Had the appellant been granted a benefit in her own right her benefit would be reduced by the amount of weekly compensation payable to her. Section 71A does not apply to the benefit payable to Mr *******. Section 71A does not give the Ministry authority to deduct his benefit from weekly compensation payments payable to the appellant as Mr ******* does not receive “a benefit and weekly compensation which arose out of the same circumstances”
[d]
The purpose of s 71A is to avoid double dipping. One person should be entitled to one source of state insurance and no more. If the Ministry's interpretation of s 71A were to be followed then the appellant and her husband would be obliged to survive on $275 a week. This does not take account of that fact that they were paid $220 per week by way of rent. 
[e]
The appellant should have been treated independently from her husband. 
[f]
Taking a statutory interpretation approach to the use of the words “the person” in s 71A(1) and (2). The correct interpretation of s 71A(2) is “if the person who is qualified to receive an income tested benefit (in this case Mr *******) or that person's spouse (Mrs *******) receives weekly compensation, then the rate of benefit payable must be reduced by the amount of weekly compensation payable to that person
[g]
Since no weekly compensation is payable to Mr ******* the rate of benefit payable to him cannot be reduced by the amount of the weekly compensation payable to Mrs ******* under s 71A. 
[h]
Had Parliament intended to deny Mr ******* a benefit because the appellant received weekly compensation it would have done so in clear and unmistakable *******uage. Instead Parliament has sought to distinguish between the appellant and Mr ******* in s 71A by differentiating between “the person” and the person's spouse in subs (1). 
[i]
Mr ******* received the benefit payments in good faith. He and the appellant altered their position by relying on the money and it would be equitable to grant relief in this case. 
[j]
A declaration is sought that the Ministry breached the principles of privacy in not advising Mrs ******* that it was collecting information from ACC and in not advising her before deducting the benefit from weekly compensation. 
[16]
On behalf of the Chief Executive it was submitted: 
[a]
That s 74A(2) must be interpreted in the light of s 74A(1). 
[b]
Had the appellant been granted a separate benefit from her husband the result of the application of s 74A would have been the appellant had no entitlement to a benefit and therefore no entitlement to supplementary benefits. Moreover the balance of compensation remaining after all of Mrs *******'s benefit was deducted would have been deducted from Mr *******'s entitlement to benefit. 
[c]
Section 252 of the Injury Prevention Compensation and Rehabilitation Act requires excess payments to be refunded to the Ministry. 
[d]
It is acknowledged that the Ministry's communication with the appellant could have been better. 
[17]
Ms Adjei noted that in general there were no financial advantages in granting married couples separate benefits. As a matter of practice separate benefits were only granted when one partner was seeking Training Incentive Allowance or an exemption from the work test. In addition the income test applicable to earnings differs. 
[18]
Following the hearing the Ministry have provided calculations of the overpayment based on both appellants receiving separate benefits. The Ministry calculations suggest that while the overpayment would be apportioned differently the total would be $49,059.70. 
Legislation Relevant to this Appeal 
[19]
Section 252 of the Injury Prevention, Compensation and Rehabilitation Act provides: 
“252
Relationship with social security benefits: reimbursement by Corporation 
(1)
This section applies if a person— 
(a)
receives a payment of an income-tested benefit under the Social Security Act 1964 in respect of a period; and 
(b)
establishes a claim to an entitlement from the Corporation in respect of all or part of the same period. 
(2)
An excess benefit payment is regarded as having been paid in respect of that entitlement. 
(3)
An excess benefit payment is the part of the benefit payment (up to the amount of the entitlement) that is in excess of the amount of benefit properly payable, having regard to the entitlement under this Act. 
(4)
The Corporation must refund the excess benefit payment to the department responsible for the administration of the Social Security Act 1964— 
(a)
if the Corporation knows that this section applies; or 
(b)
if requested to do so by that department. 
(5)
For the purposes of this section, an excess benefit payment includes a payment of any part of a married rate of benefit that is paid to the spouse [or partner] of the person who established the claim to the benefit. 
(6)
Any amount that is treated under this section as having been paid in respect of any treatment, service, rehabilitation, related transport, compensation, grant, or allowance is deemed for all purposes to have been so paid. ”
[20]
Section 71A of the Social Security Act 1964 provides: 
“71A
Deduction of weekly compensation from income-tested benefits 
(1)
Subject to subsection (4), this section applies to a person who is qualified to receive an income-tested benefit (other than New Zealand superannuation or a veteran's pension [unless the veteran's pension would be subject to abatement under section 74D of the War Pensions Act 1954]) where— 
(a)
the person is entitled to receive or receives weekly compensation in respect of the person or his or her spouse [or partner] or a dependent child; or 
(b)
the person's spouse [or partner] receives weekly compensation. 
(2)
Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person. 
[(3)
In this section, weekly compensation means weekly compensation for loss of earnings or loss of potential earning capacity payable to the person by the Corporation under the Injury Prevention, Rehabilitation, and Compensation Act 2001.] 
(4)
Subsection (2) does not apply where the person— 
(a)
was receiving the income-tested benefit immediately before 1 July 1999 and continues to receive that benefit; and 
(b)
was receiving compensation for loss of earnings or loss of potential earning capacity under the Accident Rehabilitation Compensation and Insurance Act 1992 immediately before that date; and 
(c)
section 71A(2) of this Act (as it was before it was repealed and substituted by the Accident Insurance Act 1998) required the compensation payments to be brought to charge as income in the assessment of the person's benefit. ”
[21]
Sections 86(9A) and 86(9B) of the Social Security Act 1964 provides: 
“86
Recovery of payments made in excess of authorised rates 
[(9A)
The chief executive may not recover any sum comprising that part of a debt that was caused wholly or partly by an error to which the debtor did not intentionally contribute if— 
(a)
the debtor— 
(i)
received that sum in good faith; and 
(ii)
changed his or her position in the belief that he or she was entitled to that sum and would not have to pay or repay that sum to the chief executive; and 
(b)
it would be inequitable in all the circumstances, including the debtor's financial circumstances, to permit recovery. 
(9B)
In subsection (9A), error— 
(a)
means— 
(i)
the provision of incorrect information by an officer of the department: 
(ii)
any erroneous act or omission of an officer of the department that occurs during an investigation under section 12: 
(iii)
any other erroneous act or omission of an officer of the department; but” {[sic]
(b)
does not include the simple act of making a payment to which the recipient is not entitled if that act is not caused, wholly or partly, by any erroneous act or omission of an officer of the department. ”
Our Findings 
[22]
The appellant in this case made a great deal of the fact that she had sought to have a benefit granted to her in her own right since 2002. We think it relevant to note that under Schedule 6 of the Social Security Act 1964 the rate of benefit payable to the appellant and her husband would have been the same regardless of whether the appellant was included in her husband's benefit or if they were each independently granted benefits. The only significant difference would have been that had either Mr or Mrs ******* been receiving other income their entitlement to benefit would have been calculated in accordance with income test 2 rather than income test 1. 
[23]
The issue in this case is whether s 71A of the Social Security Act 1964 applies to benefit received by Mr ******* when his wife receives weekly earnings related accident compensation payments. 
[24]
Section 71A of the Act provides a dollar for dollar deduction regime in respect of weekly compensation received by a beneficiary or his or her spouse or dependent child when assessing the rate at which Social Security Act income tested benefits are paid. If s 71A does not apply then the compensation received would fall within the definition of ‘income’ contained in s 3 of the Social Security Act 1964 and the appellant's entitlement to benefit would need to be calculated in accordance with the appropriate income test. 
Interpretation of s 71A(4) 
[25]
We note at the outset that the provisions in s 71A(1)(b) and 71A(2) as they applied in M v the Chief Executive of Department of Work and Income, AP 335/01 (Wellington High Court Registry), 27 August 2002, Goddard J, were amended as from 1 July 1999. There is no requirement in the current provision that the benefit and entitlement to compensation arise out of the same circumstances. 
[26]
We also think it relevant to note that in general the Social Security Act 1964 makes specific provision for married couples living together and different provisions for single people. 
[27]
Mr ******* argues that because s 71A refers simply “to the person” before the regime established by subs (2) can be invoked, the person receiving the benefit must also be the person receiving compensation. He says that because Mr ******* was not receiving compensation there is no basis on which an overpayment should be established in respect of his benefit using the dollar for dollar deduction regime. 
[28]
We are of the opinion however that subs (2) cannot be read in isolation from subs (1). In the first instance s 71A(1) states “This section applies”. We think it means the provisions of s 74A must be taken as a whole. Individual subsections do not stand on their own. Thus s 74A(1) (a) and (b) make it clear that the provisions of s 71A apply when a person who is receiving an income tested benefit has a spouse who receives weekly compensation. This in our view includes the deduction regime outlined in subs (2). 
[29]
Put another way, subs (1) refers to s 74A applying “to a person” in the circumstances set out in subss (1)(a) and (b). Subsection (3) defines weekly compensation payable “to the person”. It seems reasonable to infer that this refers back to the person in the circumstances described in subs (1). Finally, subs (2) provides for what happens when the person described in subs (1) receives weekly compensation, namely the dollar for dollar deduction regime. 
[30]
We consider the provision requires that weekly compensation payable to Mrs ******* be taken into account to calculate the rate of benefit payable to Mr ******* in accordance with s 71A(2). In this case regardless of whether Mrs ******* receives a benefit in her own right, if Mr ******* receives a benefit and his spouse receives weekly compensation the deduction regime in s 71A(2) applies. 
[31]
We are reinforced in our view in this regard by referring to the principle in M's case at paragraph 29: 
“both sections reflect the principle that applicants should have access to only one stream of ‘state assisted insurance’ in that a beneficiary cannot expect to receive both benefit and periodic earnings related compensation for the same period of time. ”
[32]
In our view the Chief Executive was correct in applying the deduction regime provided for in s 71A both to the benefit received by the appellant and the benefit received by her husband. We do not think the interpretation differs whether Mr ******* and Mrs ******* receive benefits in their own right or one partner is included in the benefit of the other. 
Section 86(9A) 
[33]
The provisions of s 86(9A) of the Social Security Act 1964 make specific provision for the circumstances in which the Chief Executive may determine that it is inappropriate to recover a debt. 
[34]
Before we can direct that a debt not be recovered we must be satisfied that each of the criteria of s 86(9A) has been made out. If one of the criteria cannot be satisfied then it is not necessary for us to consider subsequent criteria. The first issue in this case is whether or not an error as defined by s 86(9B) of the Act has occurred. This requires that there be some error on the part of an officer of the Ministry in relation to the provision of incorrect information or an erroneous act or omission by an officer of the Ministry. The appellants have not pointed to any error by an officer of the Ministry in this case. Because the appellants have been unable to point to any error on the part of an officer of the Ministry it is not necessary for us to proceed to consider subsequent criteria. 
[35]
Moreover we note the provisions of s 252 of the Injury Prevention Rehabilitation and Compensation Act 2001 which specifically provides that where a beneficiary has received an income tested benefit under the Social Security Act 1964 in respect of the same period, the person is able to establish an entitlement from the Corporation, then the Corporation must refund the excess benefit payment to the Department responsible for the administration of the Social Security Act 1964. 
[36]
We would suggest that this is a strong indication that Parliament intended that benefit payments should be recovered in a lump sum by the Chief Executive of the Ministry of Social Development and that repayment by periodic payments would not be appropriate. 
[37]
We note that the Chief Executive has accepted some responsibility for poor communication with the appellants over this matter. 
[38]
We think it would have been appropriate for the Chief Executive to send copies of his communications with ACC to the appellant so that she would have been aware of what was happening. We do not believe we have jurisdiction to consider claims that the Privacy Act has been breached. 
[39]
The appeal is dismissed. 

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