DCI 30 - PAYMENT OF ADDITIONAL COMPENSATION BENEFITS FLOWING FROM THE 1997 INQUIRY INTO MILITARY COMPENSATION ARRANGEMENTS - REQUESTS FOR INFORMATION

DEFENCE COMPENSATION INSTRUCTION - NO 30

Military Compensation Scheme - Safety Rehabilitation and Compensation Act 1988 Defence Determination 1988/3

PAYMENT OF ADDITIONAL COMPENSATION BENEFITS FLOWING FROM THE 1997 INQUIRY INTO MILITARY COMPENSATION ARRANGEMENTS

Purpose

1.The purposes of this Instruction are:

a.to explain the additional compensation benefits payable to those who are seriously injured and to the families of those who die in compensable circumstances;

b.to provide a copy of Defence Determination 1988/3 which provides the legislative authority for payment of some of the additional benefits;

c.to provide staff with procedures for paying the additional benefits.

Background

2.The Black Hawk helicopter accident of 12 June 1996 focussed attention on the levels of compensation for the dependants of those killed as well as the severely injured. On 30 October 1996, the Minister for Defence Industry, Science and Personnel announced that an inquiry into compensation for the members of the ADF would be carried out. Following consideration of the inquiry's recommendations, the Minister announced on 11 June 1997 the following changes:

a severe injury adjustment - for the severely injured the permanent impairment lump sum is to be topped up to $200,000 with an additional $50,000 for each dependent child
an additional death benefit - if an ADF member who dies is survived by a spouse and/or children, the death benefit is to be topped up to $200,000 for the spouse and $50,000 is to be paid for each child
the severe injury adjustment and the additional death benefit are not offset against pensions payable under the Veterans' Entitlements Act 1986
payment of up to $1000 for financial advice for those in receipt of a severe injury adjustment or additional death benefit
use of a treatment card system similar to that used by the Department of Veterans' Affairs
access to the Veterans' Children Education Scheme guidance and counselling services for the children of the severely injured and the children of those who die in compensable circumstances
access to the Vietnam Veterans Counselling Services for all ADF members and their families.

3.The changes operate from the start of the current Military Compensation Scheme, ie. 7 April 1994. The lump sum payments are subject to indexation, with the first increase of 1.5% applying from 1 July 1997. Future increases will be notified in amendments to DCI No. 2.

4.In addition to the compensation arrangements, a bereavement payment equivalent to four fortnightly pays will be paid to the dependants of an ADF member who dies while on continuous full time service. This is not a compensation payment and will not be administered by MCRS.

5.Authority for paying the severe injury adjustment, the additional death benefit and the payment for financial advice is contained in Defence Determination 1988/3, a copy of which forms Attachment A to this Instruction. The Determination applies to injuries or deaths occurring on or after 10 June 1997, the date of the Government's decision to increase the compensation benefits. For deaths or injuries occurring between 7 April 1994 and 9 June 1997 the increased benefits are paid on an ex-gratia basis. (See paragraph 23)

6.The Secretary, Department of Defence is responsible for the administration of the Determination. The Secretary has authorised those officers who hold level 6 and level 7 delegations under the Safety Rehabilitation and Compensation Act 1988 (SRC Act) to administer the Determination on his behalf. A copy of the authorisation Instrument forms Attachment B to this Instruction.

Additional Death Benefit

7.An additional death benefit (ADB) is payable if the deceased is survived by a spouse or by one or more dependent children and if compensation is payable to the spouse or children under the SRC Act. No ADB is payable to other dependants even though those dependants may have qualified for a payment under the SRC Act.

8.For deaths which occurred between 10 June 1997 and 30 June 1997 the ADB is $200,000 less the amount of compensation payable under the SRC Act,
ie. $200,000 - $166,441.29 = $33,558.71. This amount is increased by $50,000 for each dependent child.

9.For deaths on and after 1 July 1997 the ADB is $203,000 - $168,937.90 = $34,062.10. The amount for each child is $50,750.

10.Generally, the entire ADB is paid to the spouse. Unlike the SRC Act, no amount is held in trust. However, if a child, who is under age 18, is not in the care and custody of the spouse, the child's portion of the ADB should be paid to the guardian. For children who are 18 or over the child's portion of the ADB is paid directly to the child.

11.If an ADF member is survived by one or more children, but not by a spouse who qualifies for compensation, only the children's portion of the ADB is payable.

Severe Injury Adjustment

12.A severe injury adjustment (SIA) is payable if a person has been assessed as having 80% or more whole person impairment for the purposes of section 24 of the SRC Act and the person has suffered an injury to the brain or spinal cord resulting in paraplegia, hemiplegia, quadriplegia, an organic brain syndrome, blindness or a condition of similar effect. The amount of the SIA is $203,000 less the lump sum payable to the person under sections 24 and 27 of the SRC Act. The SIA is increased by $50,750 for each dependent child.

13.In those cases where a person has suffered an injury which is not listed above but which is considered to be of “similar effect”, MCRS National Office should be consulted before making a payment.

14.The SIA is payable even if the injured employee chooses not to accept the SRC Act lump sum. This could occur, for example, if the person prefers to take a VEA pension or if an election not to take the lump sum is made under section 45 of the SRC Act. In these circumstances the permanent impairment assessment is still undertaken and the SIA represents the difference between $203,000 and the amount that would have been paid under the SRC Act.

15.It is possible to pay an interim SIA if a payment has been made under section 25 of the SRC Act and the delegate is satisfied that the whole person impairment will be 80% or more. The interim SIA is $203,000 less the maximum amount payable under sections 24 and 27 of the SRC Act ie. $203,000 - $154,859.79 = $48,140.21. Once the final assessment of the degree of whole person impairment has been made, the SIA can be recalculated and reduced by the amount of the interim payment.

Financial Advice

16.Each person who receives an SIA or ADB can be reimbursed the cost of obtaining professional financial advice about the investment of the compensation payment. The amount which can be reimbursed is limited to $1000 where the expense was incurred before 1 July 1997 and $1015 for expenses incurred after that date.

17.A person who receives two SIA payments - an interim and a final payment, is still limited to a total of $1015 for financial advice.

Avoidance of double benefits

18.The Determination contains provisions similar to those in the SRC Act relating to damages claimed from a third person (other than the Commonwealth) and to State compensation. An SIA or ADB is not payable in respect of an injury for which a person has recovered damages or received State compensation.

19.If an SIA or ADB has been paid before the damages or State compensation are paid then the SIA or ADB can be recovered. The amount which can be recovered cannot exceed that part of the damages or State compensation which was awarded in respect of the death, permanent impairment or non-economic loss.

20.The provisions relating to the avoidance of double benefits do not apply to any payments which were made on an ex-gratia basis. Consequently, an ex-gratia payment cannot be recovered even if damages or State compensation are paid.

Payment procedures

21.The funding arrangements for the additional compensation payments are different to those applying under the SRC Act and therefore a separate DEFMIS account code must be used. The account codes are:

ADB — 45111

SIA — 45112

Financial advice — 45113

These should be used in conjunction with the standard cost centre codes, ie:

Navy — ACT — 221221

NSW — 221222

VIC — 221223

QLD — 221224

SA/NT — 221225

WA — 221226

TAS — 221227

Army — 355160

Air Force — 199020

22.If a person who is entitled to an SIA or ADB is under a legal disability the payment must be held in trust. If this situation arises the case should be referred to MCRS national office.

23.Where an injury or death occurred before 10 June 1997, payment of the SIA or ADB has been made on an ex-gratia basis by the MCRS National Office. If any further cases are identified they can be paid by the local authorised officer using account code 45101 and cost centre code 742103. These codes apply to all payments including the cost of financial advice.

24.The amount of any ex-gratia ADB is $200,000 plus $50,000 for each child, less the lump sum paid under section 17 of the SRC Act. For an SIA ex-gratia payment, however, the amount is governed by the date of payment. Thus currently any ex-gratia SIA would be $203,000 plus $50750 for each child, less the lump sum payable under sections 24 and 27 of the SRC Act.

Advice to recipients

25.When payment of an SIA or ADB is made the recipient should be advised of the financial advice entitlement. Any decision to pay or not pay an SIA or ADB must also include a notice of appeal rights. The Determination provides for the reconsideration of decisions and for appeals to the Administrative Appeals Tribunal from decisions which have been confirmed on reconsideration.

26.Where a payment has been made to or on behalf of a child, the recipient should be advised that the counselling services of the Veterans' Children Education Scheme (VCES) are available if required and that further information on the scheme is available from the local VCES office. The address of the local VCES office should be provided. The VCES should also be notified of the names and addresses of the children (and of the parent or guardian for those children who are under 18).

27.The contact details for the VCES are:

NSW and ACT — VCES Secretary