2.13 Dual eligibility under the VEA and DRCA or MRCA

2.13.1 VEA and DRCA

A person with an injury for which liability has been accepted under the DRCA may also have accepted claim/s for a Disability Compensation Payment (DCP) under the VEA. The relationship between a General Rate Disability Compensation Payment (under the VEA) and weekly 'Incapacity Payments' (under the DRCA) can be summarised as follows:

VEA General Rate Disability Compensation Payment and DRCA payments are awarded on different criteria, 'incapacity for work' and 'disability' does not mean the same thing.
- Under the VEA, a person’s Disability Compensation Payment entitlement is based on a ‘degree of incapacity’, which is a calculation of the degree to which the effects of a person’s injuries or diseases effect their function. It does not take into account their ability to undertake remunerative work.
- Under the DRCA, a person’s entitlement to incapacity payments relates to, and will compensate them for their inability to undertake remunerative work due to their accepted conditions.
As a result, for most cases where the VEA and DRCA are compensating different injuries and the person is not in receipt of the Disability Compensation Payment at the Special Rate (i.e. TPI), there is no effect.
However, where both Acts are compensating injuries which cause the same incapacity, the VEA Disability Compensation Payment is 'limited' (i.e. reduced or ceased) to offset the DRCA payments.

Incapacity payments are usually paid in respect of one condition, although in reality several compensable conditions may contribute to the persons’ incapacity for work. Delegates need to send a VEA clearance for every client where there is a VEA Disability Compensation Payment being paid. It is important that the DRCA Delegate provides full details of the compensable condition/s for which incapacity payments are being paid.

The Offsetting and Manual Payments (O&MP) team will need to determine whether the injuries for which both Acts are compensating have the same incapacitating effects, and if so, offset the VEA Disability Compensation Payment.

Example: A client has multiple accepted conditions under DRCA and VEA, with the DRCA conditions resulting in total incapacity for work. The person is receiving a General Rate of Disability Compensation Payment under the VEA, as well as incapacity payments due to their inability to undertake remunerative work. The DRCA delegate may usually only report against one of the DRCA conditions to pay incapacity payments, but, they will need to send a clearance listing all conditions relating to the client’s incapacity to the O&MP team. The Disability Compensation Payment will be offset (reduced) by the proportion of the General Rate of Disability Compensation Payment paid for the same conditions.

2.13.1.1 Person can request cessation of DRCA compensation payments

Depending on individual financial circumstances, a person may choose to receive payment under the VEA only, rather than receiving DRCA incapacity payments and a reduced (offset) VEA payment i.e. in situations where a person is also receiving a superannuation pension.

Section 43 of the DRCA enables a person to request, in writing, that their DRCA payments are ceased. This will result in any offset to their VEA Disability Compensation Payment for the same condition/s being removed. DRCA payments can be ceased prospectively only i.e. from the date the request is received. A retrospective request cannot be made.

This request can be revoked at any point (noting that this is applied prospectively and doesn't revive any entitlement for the period DRCA payments were ceased).

The request to cease DRCA payments under Section 43, or subsequently revoke that request, must be in writing.

2.13.1.2 Person is both TPI under the VEA and incapacitated under the DRCA

As a special case, a veteran who receives incapacity payments under the DRCA may also receive a Special Rate of Disability Compensation Payment under the VEA on the basis that he/she is Totally and Permanently Incapacitated (TPI). In this case, both the VEA Disability Compensation Payment and the DRCA weekly payments are being made on the same basis, i.e. an incapacity for work. The effect of a VEA TPI payment on the DRCA entitlement to incapacity payments is either:

1. Person is TPI (VEA) for same condition as for DRCA incapacity entitlement

If both Acts are compensating the same injury, and the person is in receipt of a Special Rate of Disability Compensation Payment under the VEA; the payment is limited (i.e. reduced or ceased) to offset the DRCA payments.

This is a straightforward matter and the principle to be applied is that a person is not entitled to be compensated beyond the value of the loss, by accessing compensation under two Acts for the same injury.

The DRCA delegate informs the O&MP team via the normal clearance process that weekly compensation is payable and the TPI payment should be ceased or limited accordingly.

2. Person is TPI (VEA) for condition other than the DRCA condition

Here the principle to be applied is that a person cannot be totally incapacitated more than once. It is not appropriate to compensate for more than 100% of lost capacity.

Where a person suffers successive injuries and they are totally incapacitated as a result of the first injury, there remains no earning capacity to be diminished by the effects of the second injury, and this means a person cannot be further compensated for the subsequent incapacity for work. Therefore if a person is already receiving the Special Rate of Disability Compensation Payment under the VEA for one injury, there is no further compensation payable under DRCA for a different injury, as the client is already totally incapacitated, this is supported by the case law of Dawkins v Metropolitan Coal (1947) as described below.

The High Court case of Dawkins v Metropolitan Coal (1947) established that once an employee was totally incapacitated for work by a medical condition, a second (or subsequent) condition could not also be regarded as incapacitating, i.e. not while the first one persisted, at least. This is because the first condition has already removed all work capacity. While the subsequent injury may well be of equal severity as the first and be equally capable of preventing employment (i.e. had the first not already been operative), it cannot remove a capacity for employment that has already ceased to exist.

In the Dawkins case, the Court quoted with approval from another case with a similar outcome i.e. Evans v Oakdale Navigation Collieries (1940):

'Of course, if, as the result of the first accident, the workman suffers total disability, it matters not whether he is certified to be suffering from an industrial disease which also has rendered him totally incapacitated, for in such a case there is no capacity for work on which the notional accident can operate;...'

Also, in deciding Dawkins, the Court expressed its own view that:

'In the present case the total incapacity of the worker which existed in 1945 had existed for some years prior to that date as a result of tuberculosis. It could not therefore be said to be the result of fibrosis because one hundred percent incapacity cannot be increased beyond one hundred percent by any supervening cause.'

Dawkins illustrates the principle that an employee may not be totally incapacitated twice-over i.e. simultaneously. One hundred percent incapacity for work cannot be advanced above one hundred per cent. In cases where a person suffers from two or more conditions each separately capable of totally incapacitating him/her, it is only the first of these conditions which is significant for the purposes of compensation.

If an incapacitated client’s DRCA conditions do not make a contribution to their incapacity, they must be solely incapacitated due to their VEA conditions, and the Special Rate (TPI) will therefore be payable.

Therefore, delegates about to determine entitlement to incapacity benefit should first check whether the person is also TPI under the VEA, for any cause other than the same injury claimed under the DRCA. If this is the case, weekly incapacity is not payable.

Equally, a VEA delegate about to pay a TPI payment should check whether the person is receiving incapacity payments, to ensure if the Disability Compensation Payment (TPI) should be offset or the incapacity payments ceased depending on which condition is being compensated for under each Act.

In many cases where Incapacity payments and TPI are concurrently paid for different conditions, the error will be that the different parts of the Department have received contradictory or unclear medical evidence. These cases will likely require cross-Department liaison and good clearances to ensure that we can accurately see what the correct cause of the incapacity to work was.

Summary

Where a delegate is about to determine an incapacity benefit but discovers that the person is already Totally and Permanently Incapacitated (TPI) for VEA purposes:

if the TPI is in respect of the same condition, the delegate should 'clear' the payment with the O&MP team in the usual way. Any effect on the VEA Disability Compensation Payment will be assessed and actioned by the relevant area within the Department.
if the TPI is in respect of a different condition to that accepted under the DRCA, the delegate should determine that incapacity payments may not be made, as the employee already has a prior and continuing loss of 100% of work capacity for other reasons, making further loss impossible. Delegates will need to liaise with VEA delegates to establish which VEA conditions are causing an incapacity for work, and to ensure they first caused the incapacity.

This has the overall effect that a person may access either a TPI payment under the VEA or incapacity payments under the DRCA (if entitled), but not both at once.

2.13.2 VEA, DRCA and MRCA

Section 15 of the MRC(CATP) Act 2004 states that where a person is eligible for incapacity payments under the MRCA and loss of earnings under the VEA, or incapacity payments under the DRCA, they should only receive incapacity payments under the MRCA.

Examples

1. Incapacity eligible:

A person has VEA accepted conditions of bilateral knee osteoarthritis with onset 1/1/2003, is on 80% of the General Rate Disability Compensation Payment and remains at work, with minor difficulties. Later, the person has liability accepted for lumbar spondylosis with onset of 1/1/2017 under MRCA. The person ceases work on 1/4/2017 and submits an incapacity claim. The medical evidence indicates that a combination of the lumbar spondylosis and knee osteoarthritis has made the person unfit to continue their employment. Policy would support acceptance of incapacity claim under MRCA but the person would fail the alone test for TPI.

2. TPI eligible:

A person has VEA accepted conditions of bilateral knee osteoarthritis with onset 1/1/2003, is on 80% of the General Rate Disability Compensation Payment. Later, the person has liability accepted for lumbar spondylosis with onset of 1/1/2017 under MRCA. The person submits a claim for TPI and the medical evidence demonstrates that the member has been totally unfit for work since ceasing employment in 2015. As this occurred prior to any contribution by MRCA conditions, the alone test is met and the person is eligible for TPI, but not incapacity payments.

2.13.3 Scenario matrix

The scenarios described in the following table are intended to guide delegates in dual eligibility cases, to determine against which claim and which Act incapacity payments should be made.

The knee injury is accepted under the DRCA and VEA.

The back injury is accepted under the DRCA.

The shoulder injury is non-compensable.

The depressive illness is accepted under the VEA and accepted as an aggravation under the MRCA.

The PTSD is accepted under the VEA.

The ankle injury is accepted under the MRCA.

VEA Clearances

When requesting a VEA clearance delegates should include all the conditions contributing to the incapacity and not just the condition that the incapacity has been paid against.

In cases where a person continues to receive incapacity payments after being assessed as eligible for SRDP, only the incapacitating conditions are included in the VEA clearance request.

Where a condition ceases to be a cause of incapacity, a new VEA clearance should be requested.

Note: the final column of this table is not directly relevant to the incapacity delegate but is included merely for context. It is the responsibility of the offsetting delegate to work out what requires offsetting. The responsibility of the incapacity delegate is solely to advise the offsetting delegate which conditions are the basis for paying incapacity payments.

	Scenarios	Liability to Pay incapacity	Condition to count 45 weeks against	Compensation Offsetting (staff in offsetting will make final decision after receiving request for clearance)
1.	The knee injury (DRCA & VEA) results in total incapacity. Surgery is required for the back injury (DRCA) and a medical certificate indicates the back injury as the cause of incapacity. The status of the knee injury has not changed.	As the knee injury continues to cause an incapacity liability is not impacted by the back injury.	Knee injury.	Request clearance for all conditions contributing to incapacity – knee and back injuries. DCP for knee injury (but not depression) offset by entire incapacity.
2.	The knee injury (DRCA and VEA) results in total incapacity. The person requires surgery for the shoulder injury (non-compensable) and the medical certificate indicates the shoulder injury as the cause of incapacity. The knee injury also continues to be incapacitating.	As the knee injury continues to cause an incapacity liability is not impacted by the non-compensable shoulder injury.	Knee injury	Request clearance for all conditions contributing to incapacity – knee injury. DCP for knee injury (but not depression) offset by entire incapacity.
3.	The knee injury (DRCA & VEA) results in partial incapacity i.e. the person is able to work 10 hours per week. The person requires surgery for the back injury (DRCA) and the person is totally incapacitated due to the back injury and medical certificate indicates the back as the cause of incapacity. The status of the knee has not changed. After 1 month the person returned to pre-surgery status.	As the knee injury continues to cause an incapacity liability remains under the knee condition, As the person is now totally incapacitated due to their accepted conditions, no earnings are held in calculations.	Knee injury	Request clearance for all conditions contributing to incapacity – knee and back injury. Offset DCP (up to notional limits) by all the incapacity if the incapacity is paid in respect of at least one VEA AD i.e. where the incapacity is paid for back injury, no offsetting.
4.	The knee injury (DRCA & VEA) results in partial incapacity i.e. the person is able to work 10 hours per week. The person requires surgery for the shoulder (non-compensable) and is totally incapacitated due to the shoulder injury and medical certification indicates the shoulder as the cause of incapacity. The status of the knee has not changed. After 1 month the person returns to pre-surgery status.	As the knee injury continues to cause an incapacity, compensation continues at the pre-existing rate. The amount of compensation payable is only impacted by any change in the hours actually worked and the % of N(W)E paid (if post 45 weeks). Hours used are actual hours worked (in this case 0). AE is deemed to ignore the effects of the shoulder injury i.e. the person could have continued in employment if not for the non-compensable shoulder injury.	Knee injury	Request clearance for all conditions contributing to incapacity – knee injury. DCP for knee (but not depression) offset by entire incapacity.
5.	The knee injury (DRCA & VEA) initially incapacitates the person. The incapacity from the knee injury fully resolves and now the back injury (DRCA) incapacitates the person.	Compensation is paid only for the back injury.	45 weeks commences under the back condition.	Request clearance for all conditions contributing to incapacity – back injury. DCP is for knee and depression, therefore no offsetting.
6.	The person is totally incapacitated due to their knee injury (DRCA & VEA). Later the back injury (DRCA) is added to medical certificates as a cause of incapacity for work.	The knee injury continues to be incapacitating. Liability is not impacted by the back injury so long as the knee effects remain.	Knee injury	Request clearance for all conditions contributing to incapacity – knee and back injury. DCP for knee (but not depression) is offset by entire incapacity.
7.	The person is medically discharged with the knee (DRCA & VEA) and the back injuries (DRCA) jointly contributing to the person’s incapacity.	Delegate must assign the incapacity to an injury/claim, usually it would be assigned to the injury that causes the most incapacity.	Knee or back injury, whichever is considered to be contributing the most to the incapacity.	Request clearance for all conditions contributing to incapacity – knee and back injury. Offset DCP (up to notional limits) by all the incapacity if the incapacity is paid in respect of at least one VEA AD i.e. where the incapacity is paid for back injury, no offsetting.
8.	The person is medically discharged with the knee (DRCA & VEA) and depressive illness (MRCA & VEA) jointly contributing to the person’s incapacity.	Both give rise to incapacity but we can only pay under one Act, in this case section 15 of the MRC(CTP) Act 2004 would indicate that we have to pay under the MRCA.	45 weeks applied under MRCA.	Request clearance for all conditions contributing to incapacity – knee injury and depression. Offset DCP (up to notional limits) by all the incapacity if the incapacity is paid in respect of at least one VEA AD.
9.	The person is partially incapacitated due to the knee injury (DRCA & VEA). A sequela hip condition (DRCA) increases level of incapacity.	As the knee injury continues to cause an incapacity as well as giving rise to the accepted hip injury, liability remains under the knee condition.	Knee injury.	Request clearance for all conditions contributing to incapacity – knee and hip. DCP for knee (but not depression) offset by entire incapacity payment.
10.	The shoulder injury (non-compensable) results in total incapacity. The person requires surgery for the knee injury (DRCA & VEA) and medical certificate indicates the knee injury as the cause of incapacity. The status of the shoulder has not changed.	The non-compensable shoulder injury continues to cause total incapacity, the person is not entitled to incapacity payments for the knee condition.	Not applicable.	No compensation
11.	The person presents well after discharge with a mix of compensable and non-compensable injuries listed as the cause of incapacity.	The chronology of the incapacity should be investigated: If compensable injuries first caused total incapacity then there is liability to pay – refer scenario 4. If non-compensable factors first caused total incapacity then there is no liability to pay – refer scenario 10. If the combination of the injuries results in the incapacity then need to consider whether the compensable injuries would give rise to the incapacity regardless of other factors or whether the person would be incapacitated if not for those compensable injuries. See section 2.11r	If there is contribution to the incapacity by a MRCA condition then the payments should be made under the MRCA and 45 weeks applied under the MRCA. If there is no contribution by MRCA condition/s then the liability (and 45 weeks) should be attributed to a DRCA condition (usually the condition that most significantly contributes to the incapacity). A person is not entitled to a separate 45 week period for each DRCA condition, instead the 45 week period for each condition runs concurrently, i.e. they receive only one 45 week period.	Request clearance for all conditions contributing to incapacity.
12.	The person is partially incapacitated due to their ankle injury (MRCA) and is able to work 3 days per week. Subsequently the person’s PTSD (VEA) causes total incapacity.	Person continues to receive incapacity payments under the MRCA, unless that incapacity resolves.	45 weeks applied under the MRCA.	Request clearance for all conditions contributing to incapacity.

Source URL: https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/incapacity-policy-manual/2-investigating-entitlement-incapacity-payments/213-dual-eligibility-under-vea-and-drca-or-mrca

Last amended

Wed, 21/09/2022 - 12:00pm