B18/1995 ADMINISTRATIVE DELAY ADDING TO EXISTING OVERPAYMENT

DATE OF ISSUE:    16 MARCH 1995

ADMINISTRATIVE DELAY ADDING TO EXISTING OVERPAYMENT

INTRODUCTION

The purpose of this instruction is to clarify policy and provide procedural guidelines concerning overpayments which have been increased, or exacerbated, by administrative delay.

BACKGROUND

2.Under current policy, "administrative" overpayments may be caused by administrative error or administrative delay.  A debt is attributable to administrative error if the Commonwealth is wholly responsible for causing the debt.  Where these debts arise, the payments were received in good faith, and the recovery would cause extreme financial hardship, the debt may be waived under s206 of the Veterans' Entitlement Act 1986 (VEA) - [paragraph 17 refers].  In situations where the pensioner contributed to an overpayment, whether knowingly or unknowingly, the policy is that the debt is not considered to be attributable to administrative error.

3.Administrative delay refers to a delay in implementing a determination by a delegate to reduce or cancel a benefit, or a failure to action correspondence from a veteran in a timely manner, i.e. the benefit is not varied by the date specified or no action is taken because of backlogs etc.  If the pensioner is even one day late in notifying of a change in circumstances, the date of effect of the pension reduction is the day after the change of circumstances, even if that advice is not actioned in a timely manner.  Under current legislation, there is no discretion to vary this date.  The overpayment exists for the whole period from the day the change of circumstances happened, until pension and/or allowance has been reduced or cancelled.

4.Concern has been expressed with the existing policy which allows an administrative delay to add to the amount of an overpayment, where the pensioner advises of a change outside the prescribed time limits and there is then a further lengthy period where the advice remains unactioned.

5.It is not considered reasonable in most cases to expect a pensioner to realise they are receiving an incorrect rate of payment if they have advised the Department of the change in circumstances; and/or to understand that their overpayment includes an amount incurred as a result of the Department not actioning their advice in a timely manner.

NEW POLICY

6.The new policy aims to place the onus back on the Department to process cases with expedience and to be "overpayment aware".

7.It would apply where a veteran or spouse notifies the Department in writing of a change in circumstances after completion of the 21 day notification period, and the Department fails to reduce the pension within a 28 day period from receipt of the written advice.

8.The policy will operate where a pensioner advises of a change in circumstances outside the prescribed notification period and this event will reduce his/her payments retrospectively.  That portion of the overpayment caused by the administrative delay is to be waived.  The rules for waiver in this instance would be independent of the hardship provisions.

Example 1:

• A veteran advises of an increase in income on 6/10/94, which is two months after the increase occurred (i.e. his income increased from 6/8/94).  The advice is not actioned by the Department until 6/1/95.  The overpayment period as per the legislation, is from 6/8/94 to 6/1/95.

Under the new policy, the overpayment would be raised for the total period, but the amount representing the period from 3/11/94 (6/10/94 + 28 days) to 6/1/95 would be waived.

Example 2:

• A veteran who is receiving rent assistance, moves to a new residence on 10/12/93.  He notifies the Department of a change of address on 5/2/94, which is outside the prescribed notification period.  No investigation is conducted as to his new type of accommodation.  As a result of a rent verification exercise on 12/7/95, it is revealed that he moved into a Housing Commission unit.

Because no rent assistance is payable in respect of Housing Commission rental, an overpayment exists from the day he moved (i.e. 10/12/93).  However, that portion of the overpayment which occurred because of the Department's failure to properly ascertain his new rental status is waived, ie the period from 5/3/94 (5/2/94 + 28 days) to 12/7/94.

9.Under the new guidelines, that part of the amount owing caused by administrative delay will be waived only if:

• there has been no attempt to deceive or defraud the Department; and

• the pensioner did not know they were receiving the incorrect rate of payment (i.e. it was received in good faith); and

• the pensioner has notified a change in circumstances but this notification is late; and

• the delay in acting upon advice of the change in circumstances is more than 28 days from receipt of written advice from the veteran.

SCENARIOS NOT COVERED BY THE NEW POLICY

10.The new policy will NOT apply where a pensioner does not notify of an event which would reduce his/her payments, and this event is not discovered until some Departmental action is taken, eg data matching, a denunciation, a third party, or a Departmental Initiated Review (DIR).  This exemption applies even where administrative delay compounds the amount of overpayment.  In these cases, the overpayment is calculated from the day following the event to the day the payment is reduced to the correct rate.

TIMELINESS TARGET FOR DVA

11.The appropriate timeliness target for Branch staff to action Pensioner Initiated Reviews (PIR) is 28 days from receipt of the written advice of changed circumstances.

12.In determining the appropriate deadline, consideration was given to the time required for the veteran to advise the Department of his changed circumstances (eg 21 days); the existing PIR targets; and the fact that procedural guidelines require immediate reduction of the service pension.  Any overpayment calculation occurs later.  It is important to remember that the overpayment end date is the date that the pension is reduced.

LEGAL OPINION

13.The question of the effect of any administrative delay can only be relevant when considering the question of waiver or write-off of an overpayment.  There is no discretion to vary the date of effect of a reduction or cancellation of pension.

14.There has been no "change of policy" concerning how overpayments are to be calculated because to do so would be to ignore the provisions of the Act.  Instead, there has only been a change of policy concerning the exercise of the discretion to waive or write-off overpayments in certain circumstances.

WAIVER GUIDELINES

15.The waiver guidelines have been amended as follows:

"Unless a debt falls within a class specified by the Minister, a delegate may exercise the discretion to waive recovery, or waive part of the recovery, of a debt where he or she is satisfied that:

the debt arose as a result of an administrative error, and the payment was received in good faith, and the recovery would cause extreme financial hardship for the person(s);

or

the debt arose due to unusual circumstances (eg as outlined in DI B31/93);

or

the debt is lower than the automatic waiver amount (eg currently $200);

or

the debt was increased by administrative delay."

CONTACT OFFICER

16.The contact officer for enquiries regarding this policy is Chris Sugden on telephone (06) 2896441.

W R MAXWELL

A/g NATIONAL PROGRAM DIRECTOR

BENEFITS