4.3.2 Entitlements affected by third party common law action

Division 3 of Part 3 of Chapter 10 of the MRCA deals with the effects of a person themselves recovering common law damages from a third party related to an accepted cause of action.

Chapter 4.3.3 deals with a situation where the Commonwealth recovers the damages on behalf of the person or dependant.

When a person recovers damages related to a cause of action (being the injury, disease, death, or loss of/damage to, medical aids) then there are legislative requirements and implications that result.

Notification of Damages

Similar to the requirement of a person to inform the MRCC of the lodgement of a claim for common law damages, section 400 of the MRCA requires a person to inform the MRCC of the recovery of damages no later than 28 days after the damages are recovered.

The need for this requirement to be met is to be communicated strongly in any communication that the delegate has with the claimant, as a failure to meet this requirement creates an offence of strict liability and a monetary penalty.

For more information on strict liability and the monetary penalty see 4.2.4.

Recovery of Compensation already paid

If the person has already received compensation for the cause of action, once they recover damages related to the cause of action the MRCC is to pursue the repayment of some or all of the damages so recovered.  The amount to be repaid is the lesser of the amount of compensation already paid to the person related to that cause of action and the amount of damages awarded.

As with the damages repayment calculations for third party claims pursued by the MRCC (see 4.3.3), the calculation of the amount of compensation awarded to the person under the MRCA for the purpose of determining the amount of the repayment, is not to include any compensation paid for:

• MRCA Supplement paid under section 221 or 245 of the Act; or
• Dependant compensation under sections 242, 253 or 255 (bereavement payments and Eligible Young Person periodic payments).

Therefore, if the amount of compensation already paid to the person is calculated as being less than the amount of damages recovered by the person, they are liable to pay back the calculated amount.  However, if the amount calculated is more than the damages awarded, they are only liable to repay the amount of the damages.

The delegate must be mindful when calculating the amount of the repayment that the amount of damages awarded to the person relates to the cause of action that the compensation under the MRCA has been paid for.  If the delegate determines that any amount of the damages is awarded for any outcome other than those covered under the MRCA, the repayment must be apportioned to allow for only the proportion of the damages relating to the MRCA to be repaid.

Effect on further compensation under the MRCA

Under section 402, a person's eligibility for much of the compensation otherwise available under the MRCA in relation to a cause of action ceases upon the recovery of third party damages.

Section 5 of the MRCA defines “compensation” to include medical treatment provided under Chapter 6.  Accordingly subsection 402(2) precludes the plaintiff from receiving any compensation, including compensation for treatment provided under Chapter 6.  This may require a treatment card to be withdrawn, if all of the client’s accepted condition/s are subject to third party recovery. If the person has a White or Gold Card and has other accepted disabilities (under either the MRCA or the VEA) that are not the subject of common law action, the client will not lose their entitlement to the Gold Card, however they will not be able to access treatment at the expense of the Department for the accepted conditions for which the damages from the third party were received.  Treatment eligibility after the common law settlement will continue to be assessed based on the overall impairment points attributable to all accepted compensable conditions including those which were included in the common law action.

Section 402 applies regardless of whether the person has already received MRCA compensation or not.  This means that from the day that damages are recovered (the date of actual receipt of monetary damages) the person's eligibility for compensation (including treatment eligibility) under the MRCA for the cause of action for which compensation has been recovered ceases.

This may have a very severe impact on the person's potential wellbeing, hence the strong requirement for the repercussions of third party damages pursuit to be communicated to the person by the delegate.  At any stage when the delegate is communicating with the claimant about their claim, they must reiterate the potential impacts of their choice to instigate or continue common law action.

Not all compensation entitlements cease upon the recovery of damages.  The same exemptions apply to this eligibility as to the calculation of amounts of damages for repayment. Therefore, while most compensation ceases, the following continue:

• MRCA Supplement paid under section 221 or 245 of the Act; or
• Dependant compensation under sections 242, 253 or 255 (bereavement payments and Eligible Young Person periodic payments).

These exemptions are based on the idea that allowances to cover expenses and compensation in relation to a person's dependants (that are not linked directly to the cause of action) are not to be quantified in relation to general damages and are therefore exempt from calculations and cessation of payment.  Dependant compensation, such as Wholly Dependant Partner compensation is still to be included in the calculations.

Note – A person's eligibility to benefits does not cease if the claim was made or taken over by the MRCC as per 4.3.3 below, however payment of benefits is affected by the amount of the settlement.

Settlements

The MRCA regards payments made as the consequence of the settlement of a claim as being damages (see section 399 of the MRCA). Therefore, the fact that a person settles a case relating to a cause of action through a settlement that awards a general head of damage, or purports to be for general pain and suffering will not exempt them from the operation of sections 401 and 402.