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Accident Compensation Cases

Re SSA36/11 (SSAA, 17/10/11)

Judgment Text

DECISION 
Ms M Wallace - Chairperson, Mrs N Te Hira - Member, Mr K Williams - Member
Introduction 
[1]
The appellants appeal against a decision of the Chief Executive upheld by a Benefits Review Committee to establish and recover overpayments of Invalid's Benefit, Accommodation Supplement, Disability Allowance and Temporary Additional Support paid to the appellants in respect of the period 9 June 2008 to 31 August 2010 amounting to $60, 482.85. 
[2]
The overpayments have been established on the basis that the appellant has received compensation paid under the Workers Rehabilitation and Compensation Act of the xxxx. 
[3]
The appellants say that: 
(i)
The benefit granted to them was not made subject to repayment on the receipt of compensation as provided for in s 71 of the Social Security Act 1964. 
(ii)
The Ministry failed to advise the appellants that the benefit payments would be recovered from the compensation payment received. 
(iii)
The particular circumstances of the appellants should be taken into account in exercising the discretion to recover the debt. 
Background 
[4]
The appellants are a married couple. 
[5]
In May 2006 while working in xxxx suffered a heart attack leading to hypoxic brain injury. 
[6]
The appellants subsequently returned to New Zealand and Mr xxxx applied for and was granted Invalid's Benefit and Disability Allowance from 9 June 2008. Accommodation Supplement and Temporary Additional Support were granted from 1 August 2008. 
[7]
On 15 February 2010 xxxx advised the Ministry that their house in xxxx had been sold. Following repayment of loans and the purchase of a vehicle a balance of $134,000 remained in their savings account. xxxx also authorised the Ministry to contact the solicitors in xxxx acting in respect of a compensation claim being brought in xxxx by xxxx. 
[8]
On 12 April 2010 the Ministry were advised that xxxx was to receive an out of Court settlement of xxxx$940,000. 
[9]
A copy of a proposed Deed of Settlement was received by the Ministry. On 20 July 2010 the lawyers for the appellants requested advice as to the amount to be repaid to Work and Income New Zealand from xxxx settlement. 
[10]
The lawyers were advised of the total amount of benefits paid to the appellants in the period 9 June 2008 to 31 August 2010. A copy of this letter was sent to the appellants and they were advised that their lawyers had been requested to refund this amount to Work and Income. 
[11]
A further letter received from the lawyers in xxxx advised that xxxx was to receive $1,000 a week from the settlement funds and that the appellants would no longer be entitled to receive income support from the Ministry. This figure of $1,000 per week was based on information contained in the draft settlement deed. 
[12]
On 27 August 2010 the appellant was advised that his benefit was to be cancelled from 1 September 2010. 
[13]
On 4 October 2010 advice was received that the settlement monies had not in fact been paid. At the same time xxxx met with a case manager and expressed her concern that their benefit payments had been stopped. 
[14]
Further discussions took place with xxxx but in any event on 8 October 2010 the appellant was advised in writing that his entitlement to Invalid's Benefit had been reviewed and stopped from 9 June 2008. 
[15]
The appellants sought a review of decision. The matter was reviewed internally and by a Benefits Review Committee. 
[16]
Immediately prior to the Benefits Review Committee hearing a decision was made to reinstate the appellants' Invalid's Benefit, Accommodation Supplement and Disability Allowance from 1 September 2010 while the outcome of the appellants' review of decision to cancel their benefits was pending. 
[17]
On 8 December 2010 Temporary Additional Support was also reinstated from 1 September 2010. 
[18]
A Benefits Review Committee hearing took place on 15 December 2010. That Committee upheld the original decision of the Chief Executive. 
[19]
On 1 March 2011 xxxx advised that agreement had been reached in relation to the payout of settlement monies. A decision was made to advise the appellants that their benefits would be cancelled from 14 March 2011. 
[20]
The appellants' lawyers in xxxx were advised of the amount required to refund the benefits paid to the appellant and xxxx between 9 June 2008 and 13 March 2011. On 17 March the appellants were advised that additional overpayments had been established for the period 1 September 2010 to 13 March 2011 amounting to $8,291.04 for xxxx and $8,290.71 for xxxx. The total amount to be recovered was $77,064.60. The letter advised that the amount of $321 had already been recovered from their benefits leaving a balance owing of $76,743.60. 
[21]
On 29 March 2011 the amount of $76,769.21 was refunded by the xxxx lawyers to Work and Income. 
[22]
The appellants lodged an appeal in relation to the decision of the Benefits Review Committee. 
Legislation relevant to this Appeal 
[23]
Section 81 of the Social Security Act 1964 provides for the review of benefit entitlement in the following way:- 
“[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. ]]] ”
[24]
Section 71 of the Social Security Act 1964 provides for the circumstances where compensation other than weekly compensation paid under the Accident Compensation and Rehabilitation Act 2001 is claimed and recovered in the following terms:- 
“[71
Special provisions where compensation or damages recoverable by applicant 
(1)
Notwithstanding anything to the contrary in [[this Act]] [[or the Social Welfare (Transitional Provisions) Act 1990]] [[or Part 6 of the War Pensions Act 1954]] [[or the [New Zealand Superannuation and Retirement Income Act 2001]]], where any person who has recovered or is entitled to recover compensation or damages from any other person in respect of any disability caused by accident or [[disease or in respect of]] [[wrongful or unjustifiable dismissal]] claims any benefit, the following provisions shall apply: 
(a)
Where any compensation or damages have been recovered, the [[chief executive]] may refuse to grant a benefit or may grant a reduced benefit for the period of disability [[or loss of expectation of employment]] in respect of which the compensation or damages have been paid or are deemed by the [[chief executive]] to have been paid; and 
(b)
Where any applicant for a benefit has a claim against any person to recover any compensation or damages, the [[chief executive]] may grant a benefit subject to the condition that the whole or such part of the benefit as the [[chief executive]] may require shall be repaid to the [[chief executive]] out of any compensation or damages that may thereafter be recovered, and in any such case the amount of the benefit or that part thereof, as the case may be, shall constitute a charge on the compensation or damages and may be recovered as a debt due to the Crown from the beneficiary or from any person liable for the payment of the compensation or damages. 
(2)
For the purposes of this section the expression compensation or damages includes any ex gratia payment made in settlement of or on account of a claim for compensation or damages[[; but does not include any impairment lump sum received under Schedule 1 of the [Accident Compensation Act 2001]]].] ”
Our Findings 
Does s 71 of the Social Security Act 1964 apply in this case? 
[25]
Section 71 of the Social Security Act 1964 makes provision for circumstances where compensation or damages are recoverable or recovered by a person in two specific situations. 
[26]
Section 71(1)(a) provides that where compensation or damages have been recovered the Chief Executive may refuse to grant a benefit. 
[27]
The second part of s 71(1)(a) gives the Chief Executive a discretion to grant a reduced rate of benefit for the period of disability in respect of which the compensation or damages have been paid or is deemed by the Chief Executive to have been paid. Again this discretion is linked to the damages having already been recovered. 
[28]
Whether the Chief Executive refuses to grant a benefit or grants it at a reduced rate is dependent on compensation or damages having already been recovered. Section 71(1)(a) is directed at future applications for benefit. It does not provide for a backdated review. It does not therefore apply in this case. 
[29]
It is a provision which the appellants need to be aware of in the future. If they apply for benefits again the Chief Executive may in the future refuse to grant a benefit on the basis of the compensation xxxx has received. 
[30]
Section 71(1)(b) permits the Chief Executive to grant a benefit subject to a condition that the benefit be paid out of any compensation or damages that might be recovered. There is no dispute that the Chief Executive did not in this case make the grant of benefit to the appellants subject to the condition that the benefit must be paid out of any compensation or damages recovered. Section 71(1)(b) does not therefore apply in this case. We also note that it follows from this that there could be no charge on the compensation or damages received as outlined in s 71(1)(b). 
[31]
Section 71(1)(a) and s 71(1)(b) are in effect complementary. Section 71(1)(b) applies to the circumstances where a benefit is sought prior to compensation being paid. Section 71(1)(a) applies to an application for benefit after compensation is paid. In summary we do not think that s 71 of the Social Security Act 1964 applies in this case at the present time although it may be applied in the future if the appellants apply for benefit again. 
Section 81 Review 
[32]
Section 81 of the Social Security Act 1964 provides for the retrospective review of entitlement to benefit. 
[33]
The benefits the appellants received are all income tested benefits. 
[34]
On receipt of advice that the appellant was to receive compensation it was open to the Chief Executive to conduct a backdated review, to ascertain whether the appellant had received any amount which would fall within the definition of ‘income’ contained in s 3 of the Social Security Act 1964 in respect of the period he was in receipt of benefit. 
[35]
Section 71 and s 71A make it clear that the intention of the Social Security Act 1964 as it relates to the relationship between payment of benefit and receipt of earnings related compensation or other compensation for loss of income is that the beneficiary should receive only one source of assistance or compensation in respect of the same period. 
[36]
A difficulty arises in this case in that the amount awarded to the appellant was a lump sum with no specific provision for income or earnings related compensation. The Chief Executive appears to have relied on a draft deed or settlement which was never signed. This is highly unsatisfactory. To date no copy of a signed settlement agreement has been provided either to the Ministry to this Authority. We understand that agreements for compensation are recorded by the Court (see s 108 of the Workers Rehabilitation and Compensation Act (NT). 
[37]
The Workers Rehabilitation and Compensation Act of the xxxx provides for compensation to be paid in respect of the first 26 weeks of incapacity (s 64), loss of long term earning capacity (s 65), permanent impairment (s 70) and medical, surgical and rehabilitation treatment expenses (s 73). 
[38]
Arguably the compensation payable under s 64 and s 65 is comparable to the weekly earnings related compensation paid in New Zealand under the Accident Compensation Injury Prevention and Rehabilitation Act 2001 in that it is intended to replace lost income. 
[39]
The Chief Executive needs to consider whether the payments received under these headings constitute “income” in terms of s 3 of the Act and make some assessment on reasonable grounds of the amount paid under ss 64 and 65 and the period for which it was paid before determining whether all or part of the benefits paid to the appellant in New Zealand should be recovered. 
[40]
The amount paid for permanent impairment under the xxxx legislation is “compensation equal to that assessed percentage (of permanent impairment) of 208 times average weekly earnings at the time the payment is made”. The “average weekly earnings” is defined in s 3 of the Act and means “Average Weekly Earnings for Full Time Adult Persons, Weekly Ordinary Time Earnings for the Northern Territory published by the Australian Statistician … .” 
[41]
Information may need to be sought from xxxx as to what amounts for medical fees and rehabilitation should be made. We note that in any allowance for carer fees for xxxx would need to be treated as income. 
[42]
After deduction of the figures for permanent impairment, medical fees. rehabilitation expenses and costs it would be reasonable to infer that the balance is comprised of compensation for loss of earnings from the date the income insurance payments ceased until the appellant attains the age of 65 years. It ought to be possible to assess how much the appellant effectively received on a weekly basis through this process. 
[43]
The benefits the appellant received in New Zealand were income tested benefits and to ascertain whether or not the appellant continued to remain entitled to those benefits requires an assessment of his income during the relevant periods. 
[44]
It is not open to the Ministry to simply recover the full amount of benefit paid without regard to what might constitute the appellant's income for that period. There is simply no statutory provision which allows this to happen. 
[45]
The Chief Executive is directed to further consider what part of the payment received by xxxx is “income” in terms of s 3 of the Social Security Act 1964 and assess the amount of that income. 
[46]
The Ministry are to report to the Authority by 15 November 2011. 
[47]
The appellant is to have an opportunity to comment on the Ministry's report. 
[48]
The Authority will then consider:- 
(i)
Whether part of the payment constitutes “income”
(ii)
The calculation of that income for the purposes of the Social Security Act 1964. 
(iii)
Whether the particular circumstances of the appellant should be considered in determining whether or not recovery of any debt is appropriate. 
[49]
The appeal is adjourned. 

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