Download PDF

House: House of Representatives

Portfolio: Human Services and Health

Commencement: On a day fixed by Proclamation. If such a day is not fixed within three months of the Bill receiving the Royal Assent it will commence on the day following the end of that period.

Purpose

To introduce a comprehensive scheme regarding the payability and recovery of Medicare benefits and nursing home benefits when the person eligible for the benefits, or who has received the benefits, is in receipt of compensation payments or has received compensation payments. The scheme will impose obligations on compensation payers to report the payment of compensation.

Background

The Human Services and Health portfolio is responsible for a number of programs that provide assistance and subsidies that may be used by people who are paid compensation in respect of an injury that resulted in the treatment that was the subject of the subsidy or assistance. Examples of such occurrences are the payment of nursing home benefits or pharmaceutical benefits in respect of the treatment of a person who successfully claims compensation in relation to the injury that necessitated the treatment.

There is no universal treatment of cases where there is assistance and compensation payable. In relation to some of the major programs:

Medicare: It is policy that Medicare should not finance a service where it can be paid for by a compensation scheme. In cases where it has yet to be determined if a person is to receive compensation, services are provided through Medicare and the costs subsequently recovered if compensation is paid. The person has a choice to be treated as a private or public patient when admitted.

Pharmaceutical Benefits Scheme: PBS provides a subsidy for the cost of pharmaceuticals and makes no distinction based on whether a person is receiving compensation. The result is that neither the person or the compensation scheme bears the full cost of pharmaceuticals.

Nursing Homes: Commonwealth subsidies are not payable in respect of a person who has received compensation or is in receipt of compensation. Where a person receives compensation after a subsidy has been paid, the subsidy can be recovered.

Home and Community Care: HACC provides funding for agencies to treat people with moderate or severe disabilities. HACC is a joint Commonwealth/State program and there are no national policies regarding the payment of fees or the recovery of funds where compensation is received.

There are a number of compensation schemes operating in Australia, including common law and statutory schemes, such as compulsory motor vehicle third party and worker's compensation schemes. Most statutory schemes have limits on the maximum amount that is payable, while unlimited damages are available at common law. Statutory schemes tend to be characterised by the use of periodic payments at a percentage of former earnings or average weekly earnings, while lump sums are the standard form of compensation in common law. Where payments are based on salary, the level of compensation is determined without regard to the subsidies that may be provided by the Commonwealth for health and community services. Most common law damages cases are settled out of court and are the result of a`deal' between the parties. Such settlements are often confidential.

The inter- action of Compensation and Commonwealth Health and Community Services Programs was discussed in a paper of that name released in June 1993 by the Review of the Relationship between Compensation and Health and Community Services Programs. The report noted the lack of statistics relating to this area and the difficulties in determining if compensation payments took into account Commonwealth subsidies. The principal question raised by the report was who should bear the costs associated with the subsidies, the injured person, the Commonwealth or compensation schemes and insurers. The report gave five options for the integration of health and community service programs and compensation schemes. In summary, they were:

* the injured person receive benefits from both the Commonwealth and compensation scheme;

* the injured person would have to choose between program schemes and compensation - the report notes that this used to be the case in workers' compensation cases but was abandoned due to the hardship it caused;

* the injured person could access Commonwealth programs but be required to repay the cost of the service if compensation was received;

* the injured person has access to Commonwealth programs and compensation payments not contain a component for the services provided by the Commonwealth, with the Commonwealth being able to recover the cost of the services from the compensation payer; and

* the Commonwealth program bear the cost of the service and this would not be recoverable from the compensation payer.

The report favoured the third, fourth or fifth options and noted:

In Australia's federal system the choice between the third and fourth approaches on the one hand and the fifth on the other, involves a choice as to whether the costs of the service in compensation cases are carried by State controlled compensation schemes (the third and fourth approaches) or the Commonwealth program (the fifth approach). 1

The Report noted that a major problem with current cost recovery schemes from compensation payments was the identification of people who had received compensation as well as benefits. The report states:

It is apparent .... that a substantial number of compensable cases avoid detection by Commonwealth programs. 2

It should be noted that other Commonwealth portfolios, such as social security, have extensive provisions dealing with the recovery of payments where compensation is paid for the period covered by the benefit.

This Bill forms part of a package that includes three other Bills of a similar name. In addition to this Bill, the most important part of the package is the imposition of an administration fee that will contribute to costs of the administration of the scheme established by this Bill. The fee will be payable by the compensation payer or insurer.

Main Provisions

`Compensation' is defined in clause 4 of the Bill and will include:

* a payment of damages;

* a payment made under a scheme of insurance or compensation, but not a scheme to which the recipient has contributed;

* a payment in settlement of a claim of damages or under an insurance scheme as described above; and

* any other compensation or damages payable to a person in respect of an injury, other than under a scheme to which the person has contributed.

Specifically excluded from the definition of compensation are:

* a payment by an individual who is not insured or otherwise indemnified for liability in respect of the injury where the person making the payment is not required to make the payment by law (a person will be taken to be indemnified if they are a member of an organisation and that organisation could make a payment in respect of the liability);

* a payment of criminal injuries compensation; and

* an amount not required to be paid by Australian law, other than an amount that extinguishes a claim for compensation.

The Bill will apply to compensation payments made under a judgement, settlement or reimbursement arrangement made after the commencement of the Bill even if it relates to an injury that occurred before commencement (clause 5).

Medicare Benefits

Clause 7 deals with the situation where there is a reimbursement agreement in force and under the agreement the injured person is to be reimbursed for medical treatment in respect of the injury as those expenses are incurred. In such a case, Medicare benefits will not be payable in respect of the services if the person has been reimbursed for the service before the Medicare claim is made.

The clause also provides that if a Medicare benefit has already been paid in respect of a service for which the person is reimbursed, the person will be liable to re- pay to the Commonwealth the amount of the benefit. This provision will apply only to the extent that it is not a tax. Constitutional requirements require a separate law to impose a tax (the situation where such a liability is deemed to be a tax is dealt with by clause 5 of the Health and Other Services (Compensation) Care Charges Bill 1994).

The situation where a compensation judgement or settlement is made after a Medicare benefit has been paid is dealt with in clause 8 which provides that the amount of benefit will be payable to the Commonwealth. If the judgement or settlement apportions some of the responsibility to the injured person and so reduced the compensation payable, the amount of benefit repayable to the Commonwealth will be reduced in the same proportion. If the amount awarded in respect of past medical care is less than the amount due to the Commonwealth, that amount will be reduced to the amount awarded for past medical care. A similar provision to that in clause 7 dealing with taxation is contained in clause 8 and clause 6 of the Health and Other Services (Compensation) Care Charges Bill 1994.

Nursing Home Benefits

Clauses 9 and 10, which deal with the non- payability of nursing home benefits or the liability to refund benefits are the same as for clauses 7 and 8, with the exception that clause 10 does not contain a provision similar to that in clause 8 dealing with past care. The Health and Other Services (Compensation) Care Charges Bill 1994 also contains taxation provisions in respect of nursing home benefits similar to those referred to above.

Compensation Claims

As a general rule, if a person makes a claim against another for compensation relating to an injury, the latter person is to notify the Health Insurance Commission (HIC) of the claim. This will not apply where:

* there is an insurer/representative organisation in relation to the claim and the person required to notify the HIC has notified the insurer/representative organisation (in which case the insurer/representative organisation will be required to notify the HIC);

* before the time within which notice must be given (generally 6 months) a court or compensation authority decides that no compensation is payable or the person discontinues their claim (clause 11); or

* if, within 6 months of the claim for compensation being made, a reimbursement agreement is entered into. In such a case, the person liable to reimburse the claimant is to notify the HIC of the agreement within 28 days of the agreement being entered into (clause 13) (also see clause 25 below).

Clause 12 deals with claims made and not finalised before the commencement of the Bill. The provision is substantially similar to the notification requirement contained in clauses 11 and 13 and provided that if a judgement or settlement relating to a compensation claim is made the same notification provisions are to apply. The major difference between the requirements of clauses 11 and 12 is that the latter allows a 12 month, or 12 month and 28 days depending on the circumstances, period within which the HIC must be notified of the claim for compensation.

The Managing Director of the HIC may give an insurer, representative organisation or the person against whom the compensation claim is made (the person or organisation to be given the notice depending on the same criteria as the obligation to notify the HIC) notice that the Managing Director may seek to recover amounts payable under this Bill, or the related Charges Bill or Administration Bill (clause 14). The Managing Director may also require the claimant to provide details of their claim as they relate to the provisions of services for which a Medicare benefit has been paid or whether nursing home services have been provided. Such a request is to include details of any Medicare benefits that have been paid to the person since their injury (clause 17).

Where such a notice is given, the person is to provide the details requested within 28 days, or such further time as allowed by the Managing Director, and if the person fails to provide the statement within the required time (28 days with the Managing Director being able to extend this period) the notice will be taken to be a correct statement of the benefits provided (clause 18).

Clause 21 deals with the situation where a person has given a statement to the Managing Director or has failed to provide such a statement within the required time. In such a case, the Managing Director may issue a further notice informing the notifiable person (i.e the insurer, representative organisation or claimant depending on the circumstances) of their liability to the Commonwealth. The Managing Director must give a copy of such a notice to the claimant. A notifiable person may request that the HIC provide such a notice and the HIC must obey such a request.

A notifiable person must not make a settlement in respect to a claim of compensation unless the Managing Director has, within 3 months prior to the settlement, given them a notice under clause 21 (clause 22).

A notifiable person will be required to give the HIC notice of any compensation judgement or settlement within 28 days of the judgement or settlement. The notice must be accompanied by a copy of the judgement or settlement ( Note: Many settlements are currently confidential) (clause 23). When the HIC receives such a notice, they are to notify the sender of any liability to the Commonwealth (clause 24).

Clause 25 provides that where a notice of a reimbursement agreement is received in accordance with clause 13, the person providing the notice is to be given a notice specifying any liability to the Commonwealth.

It will be an offence, with a maximum penalty of 6 months imprisonment, to fail to comply with a notification requirement. It will also be an offence, with a maximum penalty of 12 months imprisonment, to knowingly provide false or misleading information (clause 26).

Payments to the Commonwealth

Clause 27 provides a limit on the amount of compensation that is recoverable where the amount of compensation received is less than the total Commonwealth benefits received. The limit will be the amount of compensation received less any amount recoverable under the Social Security Act 1991.

If the Managing Director gives a compensation payer notice under clauses 24 or 25 specifying a liability to the Commonwealth, the compensation payer is to pay the amount to the Commonwealth within 28 days of being notified. It will be an offence, with a maximum penalty of 12 months imprisonment, to fail to comply with this requirement (clause 28).

Clause 29 provides that amounts payable to the Commonwealth as a result of a compensation judgement or settlement, or from a reimbursement settlement, will be a debt recoverable from the person who has failed to comply with the provisions of this Bill. The recovery of such an amount is not to affect the payment of compensation or the amount of compensation payable.

Where an amount is recoverable under clause 28:

* compensation will not be payable until the earlier of the time the amount is paid to the Commonwealth or the end of the 28 day period specified in clause 28;

* an insurer which has paid under clause 28 an amount due to the Commonwealth will not be liable to pay that amount to the person receiving the compensation;

* the compensation payer will not be liable to pay an amount payable under clause 28 or sub- clauses 29(3) and 29(4), which deal with failure to comply with clauses 11, 12, 13 and 23, to the person receiving the compensation. This will also apply to an insurer's liability in respect of the compensation payer where the insurer has paid the above amounts.

The amounts referred to above do not include any administrative fee payable (clause 30 and 31).

Where there has been a judgement or settlement of a compensation claim, the compensation payer or insurer must not pay any compensation unless a notice has been issued under clause 24, which provides for a notice of liability to the Commonwealth to be issued and:

* the time limit for the issuing of such a notice has expired (28 days after a clause 23 notice has been received);

* the amount has been withheld from the compensation payment; or

* the Commonwealth has been paid the amount of the liability. It will be an offence to fail to comply with these requirements, with the maximum penalty being 12 months imprisonment. If the person entitled to compensation receives an amount of compensation which should have been withheld, the amount will not be recoverable from the person (clause 32).

Administrative Matters

Clause 34 provides that the Bill will be administered by the HIC.

The Managing Director will be given power to obtain information relevant to the administration of this Bill by clause 36.

Endnotes

1. Review of the Relationship between Compensation and Health and Community Services Programs, Compensation and Commonwealth Health and Community Services Programs, pp. 56 and 57.

2. Ibid., p. 57.

C. Field (Ph. 06 2772439)

Bills Digest Service 7 December 1994

Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1994.

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1994.