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Accident Compensation Cases

Re SSA042/07 (SSAA, 14/11/07)

Judgment Text

DECISION ON THE PAPERS 
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: 
[a]
Review the benefits paid to the appellant in respect of the period 15 March 1998 to 11 September 2005 and to charge ACC weekly compensation against the appellant's benefit entitlement during this period and establish an overpayment of $48,404.56. 
[b]
To request reimbursement of the overpayment directly from ACC from the arrears of weekly compensation granted to the appellant. 
[c]
Charge ACC payments as a direct deduction against benefit entitlement rather than as income. 
Background 
[2]
The appellant is in receipt of Invalid's Benefit paid at an abated rate taking into account rental income she receives and compensation from ACC. 
[3]
The appellant was originally granted ACC on 14 August 1997. She was also granted Domestic Purposes Benefit from 8 August 1997. We understand that on 14 March 1998 the appellant's weekly compensation payments ceased. 
[4]
On 23 March 2001 the appellant was transferred to Invalid's Benefit from 11 December 2000. 
[5]
In letters dated 22 August 2005 and 2 September 2005 ACC advised the appellant's advocate that its decision to discontinue payments of ACC in 1998 had been revoked and her weekly compensation had been reinstated from 15 March 1998. 
[6]
On 16 September 2005 ACC advised the Ministry of the weekly compensation details for the appellant for the period 12 August 1997 to 20 November 2005. 
[7]
On the same date the Ministry suspended the appellant's Invalid's Benefit from 12 September 2005 as it was understood that the amount of compensation to be charged against the appellant's benefit would cancel her entitlement. Subsequently a decision was made that the appellant's weekly compensation should be charged as income rather than as a direct deduction. As a result on 3 October 2005 the appellant's Invalid's Benefit was resumed at an abated rate of $94.05 per week. The Ministry then proceeded to review the appellant's entitlement to benefit in respect of the period 15 March 1998 to 11 September 2005. As a result an overpayment was established for $48,404.56. 
[8]
ACC were advised of this amount and on 14 December 2005, paid the full amount to the Ministry. 
[9]
The appellant sought a review of the decision to establish the overpayment and to request reimbursement from ACC for the overpayment. Subsequently an adjustment of $14.09 was made to the overpayment figure and refunded to the appellant on 28 February 2006. 
[10]
On 27 February 2007 in the course of an internal review it was determined that the decision to charge weekly compensation as income was incorrect. Rather the weekly compensation should have been charged as a direct deduction. This resulted in an increase in the amount of the overpayment. However it appears that at the present time the Ministry is not pursuing the increased amount. The decision to establish and recover an overpayment of $48,404.56 was referred to a Benefits Review Committee. The Benefits Review Committee upheld the decision of the Chief Executive. The appellant then appealed to this Authority. 
Case for the Appellant 
[11]
In her Notice of Appeal the appellant notes: 
[a]
Her request for review relates to a decision of Work and Income New Zealand (WINZ) dated 18 November 2005. The Benefits Review Committee decision refers to a decision dated 18 November 2006. 
[b]
Her concern related to an overpayment for the period 15 March 1998 to 11 September 2005. The letter advising her of the establishment of the overpayment did not precisely state which legal aspects gave rise to the benefit overpayment, the method used to calculate the overpayment or explain how the overpayment of $48,404.56 is connected to the payment of $95,891.90 weekly compensation that she received. 
[c]
She requested the decision of 18 November 2005 be reconsidered by the Authority. 
[12]
She states that in this appeal she seeks to: 
Ascertain the legitimacy of the original decision document of 18 November 2005; 
Assess the amount of $95,891.90 weekly compensation entitlement and hence ascertain if this results in a benefit overpayment; 
Consider whether under s 71A weekly compensation should be charged dollar for dollar or as income in this particular situation. 
[13]
The appellant has elected to have this matter dealt with on the papers. In response to the s. 12K report the appellant has filed submissions submitting: 
[a]
The Appeal Authority does not have jurisdiction to hear an appeal in relation to the decision of 18 November 2005. However the submission goes on to question whether the Chief Executive can conduct a retrospective benefit review and “come up with an overpayment of $48,404.56 without explanation?”
[b]
There is not sufficient evidence to show that there is a causal link between the $48,404.56 overpayment of benefit and the $95,891.56 backpayment of compensation received. 
[c]
The appellant expresses the view that the Ministry has withheld $48,404.56 which correctly belongs to her. 
[d]
The appellant makes various allegations about the Benefits Review Committee hearing. 
Case for the Ministry 
[14]
On behalf of the Chief Executive it is submitted that: 
[a]
The power to review entitlement to benefit is contained in s 81 of the Act. The power of review is a wide one. 
[b]
It is inconceivable that the legislation was intended to allow individuals to receive both benefit and periodic earnings related compensation for the same period of time. 
[c]
Section 252 of the Injury Prevention Rehabilitation and Compensation Act 2001 requires the Accident Compensation Corporation to directly refund the Ministry for any excess benefit payment received by a person who receives an income tested benefit in respect of a period they have also been established entitlement to ACC. 
[d]
In any event the appellant cannot seek a review under the Social Security Act 1964 for a matter decided under ACC legislation. 
[e]
Section 71A of the Social Security Act 1964 provides that a benefit payable under the Act should be reduced by the amount of any weekly compensation payments. 
[f]
Section 71A(4) provides a limited exception to the direct deduction regime. 
[g]
Section 71A(4) provides that the appellant must be receiving an income tested benefit immediately before 1 July 1999 and continue to receive that benefit. The Ministry agree that the appellant meets that criteria. 
[h]
In addition however the appellant must also have been receiving compensation for loss of earnings or loss of potential earning capacity under the Accident Rehabilitation Compensation and Insurance Act 1992 immediately before 1 July 1999. 
[i]
When applying any definitions to the wording of s 71A(4), for the appellant's circumstances to have met the criteria she would have had to have been receiving compensation very close to the period of time preceding 1 July 1999. In fact the appellant did not receive compensation until much later namely 2005. 
[j]
It is significant that the phrase “persons entitled to receive or receives weekly compensation” is used to differentiate between actually getting or receiving compensation to having an entitlement to get or receive compensation. It is submitted that the appellant's circumstances did not meet the criteria contained in s 71A(4)(b) and as a result she did not qualify for the exception contained in s 71A(4). 
[k]
An overpayment is a debt due to the Crown. 
[l]
The provisions of s 86(9A) cannot be met in this instance because the debt was not caused by an error of an officer of the Department but by the operation of s 71A of the Social Security Act 1964. 
Legislation Relevant to this Appeal 
[15]
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. 
81 Review of benefits 
[(1)
The [chief executive] may from time to time review any benefit in order to ascertain— 
(a)
Whether the beneficiary remains entitled to receive it; or 
(b)
Whether the beneficiary may not be, or may not have been, entitled to receive that benefit or the rate of benefit that is or was payable to the beneficiary— 
and for that purpose may require the beneficiary or his or her spouse [or partner] to provide any information or to answer any relevant question orally or in writing, and in the manner specified by the [chief executive]. If the beneficiary or his or her spouse [or partner] fails to comply with such a requirement within such reasonable period as the [chief executive] specifies, the [chief executive] may suspend, terminate, or vary the rate of benefit from such date as the [chief executive] determines. 
(2)
If, after reviewing a benefit under subsection (1) of this section, the [chief executive] is satisfied that the beneficiary is no longer or was not entitled to receive the benefit or is or was entitled to receive the benefit at a different rate, the [chief executive] may suspend, terminate, or vary the rate of the benefit from such date as the [chief executive] reasonably determines.] 
[(3)
If, after reviewing a benefit under subsection (1) of this section, the [chief executive] considers the beneficiary is more appropriately entitled to receive some other benefit, the [chief executive] may, in his or her discretion, cancel the benefit the beneficiary was receiving and grant that other benefit commencing from the date of cancellation. ”
[16]
Section 252 of the Injury Prevention, Rehabilitation and Compensation Act 2001 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. ”
[17]
Generally speaking overpayments of benefit are debts due to the Crown and must be repaid. A limited exception to this rule is contained in s 86(9A). Sections 86(9A) and (9B) of the Social Security Act 1964 provide: 
“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 
Jurisdiction 
[18]
It is somewhat unusual to find an appellant appealing a decision and then alleging that the Authority has no jurisdiction in the matter. 
[19]
We are satisfied that the decision of the Benefits Review Committee dated 3 May 2007 clearly relates to the establishment of the overpayment of $48,404.56 established in respect of the period 15 March 1998 to 11 September 2005. What is clearly a typographical error in paragraph 1.1 relating to the date of the Chief Executive's decision does not impact on the substance of the decision. 
[20]
We are satisfied therefore that the issue that the appellant sought to have reviewed was considered by a Benefits Review Committee and as the Benefits Review Committee confirmed the decision of the Chief Executive on that issue this Authority has jurisdiction to consider whether or not the decision to establish an overpayment of benefit in respect of the period 15 March 1998 to 11 September 2005 amounting to $48,404.56 was correct. 
[21]
The second point that should be made is that hearings before this Authority are by way of rehearing. The Authority considers all of the evidence available and makes its own decision on the matters at issue. The Authority is not confined to a review of the decision of the Benefits Review Committee. For that reason the failings in the processes of the Benefits Review Committee whilst unfortunate do not have any significant bearing on the decision of this Authority. 
Retrospective Review 
[22]
The appellant questions whether the Chief Executive has power to retrospectively view an entitlement to benefit where a delayed payment of ACC is made in respect of the same period in which a benefit has been received. This issue has been dealt with by the High Court on a number of occasions now. 
[23]
Section 81 of the Act empowers the Chief Executive to review the payment of benefit from time to time. The power of review may relate both to current benefit entitlement or entitlement in the past. The provisions of s 86(1)(b) in particular provide that the power of review may be exercised to ascertain whether the beneficiary: 
“ … may not be, or may not have been, entitled to receive that benefit or the rate of benefit that is was payable to the beneficiary. ”
[24]
As was noted recently by the Supreme Court in Arbuthnot v the Chief Executive of the Department of Work and Income 2007 NZSC5
“The words emphasised give the Chief Executive power to look backwards and determine whether an overpayment has been made in the past. The Chief Executive is no longer limited to making adjustment going forward from any change of circumstances, but may reasonably determine the date from which any adjustment should take effect. Consistently with the scope of the enlarged review power an adjustment to a decision within the Department may be effective retrospectively where appropriate. ”
[25]
The High Court considered the situation of a beneficiary receiving a delayed lump sum payment of ACC in M v the Chief Executive of the Department of Work and Income HC AP 335/01 (Wellington Registry), 27 August 2002, Goddard J. Her Honour noted at para 33: 
“Section 81 plainly envisages a hindsight review of benefit entitlement. This does not mean that a beneficiary who subsequently receives backdated compensation entitlement was not entitled to have received a benefit for that backdated period. It simply means that the entitlement to benefit has been retrospectively supplanted by an entitlement to compensation. ”
[26]
We have no doubt that on receipt of advice that the appellant was to receive ACC for the period in question the Chief Executive was entitled to retrospectively review the appellant's entitlement to benefit for that period. 
Should ACC payments be treated as income or a direct deduction 
[27]
The next issue that arises is whether or not the ACC payments should be deducted directly from the appellant's entitlement to benefit as provided for in s 71A(2) or whether the ACC payments should be charged as income because the appellant meets the criteria contained in s 71A(4). 
[28]
Prior to 1 July 1999 ACC payments were treated as income in assessing entitlement to benefit. From 1 July 1999 the direct deduction regime provided for in s 71A(2) was introduced. However persons who had been receiving both benefit and ACC payments prior to 1 July 1999 were, as a result of subs.(4) permitted to continue having their ACC charged as income in assessing their benefit entitlement. 
[29]
The first criteria to meeting the requirements of subs.(4) is that the person must be receiving the income tested benefit immediately before 1 July 1999 and continue to receive that benefit. The appellant meets the criteria of subs.(4). 
[30]
The second criteria is that the person 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. The Ministry argue that applying the ordinary meaning of the words “was receiving”, and “immediately before” require that the appellant needed to be receiving compensation very close in time to the 1 July 1999. In fact the appellant did not receive the compensation until much later in 2005. This submission is made despite the fact that the appellant stopped receiving ACC payments on 14 March 1998, a little more than a year prior 1 July 1999. Attention was also drawn to the wording of s 71A(1)(a) where the phrase “the person is entitled to receive or receives weekly compensation” is used to differentiate between actually getting or receiving compensation or having an entitlement to get or receive compensation. 
[31]
We infer that the purpose of the exception for people receiving compensation charged as income prior to 1 July 1999 was to ensure that they would not suffer any financial disadvantage as a result of the changes made at that time — i.e. their income would not decrease. 
[32]
Had the appellant's weekly compensation not been wrongly terminated she would have been receiving it immediately prior to 1 July 1999. 
[33]
It seems surprising that the appellant should be treated as receiving ACC prior to 1999 for one purpose i.e. the backdate review, but not for other purposes. It is also seems surprising that Parliament would have intended that a beneficiary should be disadvantaged by the incorrect decision of ACC and unable to take advantage of the grandparenting provision in S74A(4). 
[34]
The review carried out by the Chief Executive under Section 81 is to some extent intended to place the appellant in the position she would have been in had her ACC been paid when it ought to have been paid. In our view, by implication where, on a review under s 81, arising from a backdated payment of ACC the beneficiary is treated as having been in receipt of ACC at or immediately before 1 July 1999 and has since received ACC for the period immediately before 1 July 1999 then S71A(4) should apply. ACC payments received by the appellant therefore should be treated as income, rather than a direct deduction applied. 
Notification of Decision to Recover 
[35]
The appellant received letters on 31 October 2005 advising of the change in the rate of benefit payable to her and on 18 November 2005 advising of the overpayment. No attempt to explain how the overpayment was calculated was made. That is most unsatisfactory. 
[36]
The debt involved is substantial and the appellant was entitled to have the calculation of the overpayment set out in a form she could understand. 
[37]
Some information about how the debt was calculated was provided on 25 February 2006. Computer print-outs were apparently provided, but copies of these have not been included in the S12K report. 
[38]
The poor information given to the appellant about how the debt was calculated is unsatisfactory however it does not necessarily invalidate the decision to establish the overpayment. We are unable to be sure that the quantum of the overpayment is correct. 
[39]
The Chief Executive is to provide the Authority and the appellant with a breakdown of the overpayment in an easily understood format by 10 December 2007. 
Recovery from ACC 
[40]
Section 252 of the Accident Compensation and Rehabilitation Act requires ACC to pay any excess benefit payment to the department responsible for the administration of the Social Security Act 1964 where a request is made by the Ministry or ACC is evidence that s 252 applies. ACC are obliged by law to make payment to the Ministry of Social Development. 
Recovery of Debt Pursuant to s 86(9A) 
[41]
Finally we have considered whether or not there is any basis for the Chief Executive to determine that the debt should not be recovered. Generally speaking overpayments of benefit are debts due to the Crown and must be recovered. There is a limited exception to this rule contained in s 86(9A) of the Social Security Act 1964. 
[42]
Before we can find that a debt should not be recovered pursuant to s 86(9A) we must first be satisfied that each of the criteria of s 86(9A) have been made out. 
[43]
If one of the criteria cannot be satisfied then it is not necessary for us to proceed to consider subsequent criteria. 
[44]
We are first required to consider whether the overpayment arose as a result of an error by an officer of the Ministry. There is no evidence that the overpayment arose as a result of an error by an officer of the Ministry in this case. Rather the overpayment has arisen as a result of a late decision by ACC to pay backdated compensation to the appellant for the period in question. 
[45]
As we are not satisfied that the criteria of s 86(9A) can be made out in this case we cannot direct that the debt not be recovered. 
Conclusion 
[46]
The appeal as it relates to the way in which the appellant's ACC payments are treated is allowed. 
[47]
The Chief Executive is directed to provide a breakdown of the calculation of the overpayment to the Authority and the appellant by 6 December 2007. 
[48]
The issue of the quantum of the overpayment is adjourned to that date. 
[35]
In all other respects the appeal is dismissed. 

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