Preferred methods of recovery
DVA allows the following methods of recovery with regard to MRCA and DRCA debts in order of preference:
- one off payment of full amount; or
- one off payment of discounted amount; or
- reductions in compensation payments over time.
One off payment of full amount
Recovery of an overpayment in a one off lump sum is the most efficient and economical method for the Commonwealth.
In requesting a lump sum, a delegate should have reasonable regard to the amount of pension or other entitlements payable to the client, the client’s financial circumstances, and the client’s readily available funds.
One off payment of discounted amount
If a full refund is not possible but the client has readily available funds equal to or more than 80 per cent but less than 100 per cent of the total debt, consideration should be given to offering a discount of up to 20 per cent on the total debt. In all circumstances when this offer is made and accepted, the 80 per cent or more of the total original debt must be paid within 30 days. The discount on an original debt does not apply to a person who has already entered into a recovery plan.
The offer can be made in respect of all types of MRCA or DRCA debts, except where the client or the estate has the capacity to repay the debt in full or the overpayment was caused by fraud.
The remaining 20% of the overpayment must be waived by way of a written determination under either section 429 of the MRCA or section 114D of the DRCA. See the section on waiving debts.
Deductions from compensation payments over time
If a client is in receipt of ongoing payments (e.g. incapacity payments or periodic PI payments) but is unable to repay their debt in a lump sum, then deductions can be made from these ongoing payments provided they are under the same Act. The person should be given sufficient notice prior to the deductions taking place.
Before recovering, by way of deduction from payment under the MRCA, a debt that has arisen under that Act, the MRCC must make a determination (see s415(4) of the MRCA). No determination is required prior to an amount being recovered by way of a deduction from an amount payable under the DRCA (see s 114(2) of the DRCA).
The MRCC does have the legislative authority to recover an overpayment from a pending PI lump sum payment without the permission of the veteran. However, procedural fairness requires that the veteran be informed prior to doing so. Moreover, there are situations in which it is procedurally inappropriate to recover an overpayment from a pending PI lump sum. For example, if the client already has an ongoing payment plan, and is adhering to this, then it wold be inappropriate to recover from a PI lump sum without the permission of the veteran.
The MRCC does not have legislative authority to recover an overpayment under one Act from a payment made under another Act. Although a delegate could do this with the permission of the client, there are legal risks in doing so. If the client were to renege on the agreement later, the MRCC would not have the legislative authority to enforce the agreement.