This chapter contains the following sections:
This chapter is provided for delegates investigating and determining compensation claims under the [3]Military Rehabilitation and Compensation Act 2004 (the MRCA) where a person is entitled to compensation and has, or may have, a right to recover damages in relation to the same compensable injury, disease, death or loss, or damage to, a medical aid. This chapter also specifies the circumstances in which a person cannot take common law action.
The legislative provisions governing these situations are found in Chapter 10 [4] of the MRCA, entitled “Liabilities arising apart from this Act etc”.
Certain circumstances can exist where a person entitled to compensation under the MRCA can bring a common law action against the Commonwealth, a potentially liable member or a third party for an injury, disease, death or loss, or damage to, a medical aid (the cause of action).
[1] [5]
The Commonwealth (in the guise of the Military Rehabilitation and Compensation Commission (MRCC)) can also choose to instigate or take over a claim against a third party in relation to a cause of action that is compensable under the MRCA.
The MRCA creates a statutory, no fault compensation scheme which is intended to replace the common law as a means of obtaining compensation for injury, disease, death or loss, or damage to, a medical aid due to Australian Defence Force (ADF) service. This consequently places limitations on the circumstances under which common law action can be pursued and also places restrictions on the types and amounts of compensation that can be paid where common law damages are sought by a person.
Common law action can be commenced, in certain circumstances, by a current or former member of the ADF in relation to a cause of action accepted under the MRCA. This action can either be against the Commonwealth or a potentially liable member of the Commonwealth for the non-economic loss effects of an injury or disease or against a third-party for any effect of the cause of action.
Common law action can also be commenced by the dependant of a deceased member or former member where the death is related to service or their accepted condition/s. This common law action is not restricted by any previous action by the deceased to recover non-economic loss compensation at common law.
All common law action against the Commonwealth, a potentially liable member or a third party affects compensation payable (including treatment eligibility) under the MRCA for that cause of action. The cessation, recovery or repayment of all or certain types of compensation can result from the choice to pursue a claim at common law. It is for this reason that all claimants and their dependants are required to be informed of the impacts of the choice to pursue a claim at common law on any applicable MRCA compensation. The choice by the MRCC to commence or take over a third party claim will also impact on the types and levels of compensation available to a person.
Unlike compensation under the MRCA, which is provided regardless of whether or not any negligence on the part of the Commonwealth is involved, common law action in these circumstances can only succeed if the Court is satisfied that the Commonwealth, a potentially liable member or third party was negligent.
For the sake of brevity, throughout this chapter, where a reference is made to an injury, disease, death or loss, or damage to, a medical aid the term 'cause of action' will be used. This does not relate to all circumstances covered in this chapter and where not applicable the appropriate reference will be made.
[1] (go back) [6]Part 2 of Chapter 10 [4] of the MRCA deals with a situation where a person wishes to instigate common law action against the Commonwealth or a potentially liable member in respect of a cause of action (i.e. an injury, disease, death or loss, or damage to, a medical aid that is the subject of the common law action).
In the majority of cases for common law claims under the MRCA the “Commonwealth” will refer to the Australian Defence Organisation (Department of Defence and the Australian Defence Force), but could potentially refer to any Australian Federal Government Department or statutory body.
References to a “potentially liable member” refer to another member of the ADF at the time of the cause of action. Section 387 [4] also clarifies this definition to include a person who was acting in the capacity of a member at the time of the cause of action. This could include a declared member or another person that was acting in an ADF member's stead at the time. For example, a fitness contractor who was performing a duty alongside a uniformed member while undergoing fitness training on base.
The liability of the Commonwealth or a potentially liable member to common law action from a person is restricted by the MRCA. As mentioned in the overview, the MRCA is intended to create a no-fault replacement for the common law in relation to causes of action related to ADF service from 1 July 2004. This intention is reflected in the restrictions placed on the liability of the Commonwealth to common law actions. With two exceptions, section 388 [4] of the MRCA removes the liability of the Commonwealth or a potentially liable member to common law action relating to a cause of action.
The two exceptions are:
More detail of these provisions is provided below.
The application of section 388 [4] of the MRCA absolves the Commonwealth's or a potentially liable member's liability to common law claims for a service injury or disease or the damage to, or loss of, a medical aid. This restricts the common law compensatory avenues that the MRCA is intended to replace.
Delegates need to be mindful of the restricted application of this provision. The restrictions provided by this section do not apply to:
In these two situations there are less restrictions placed on the pursuit of common law damages. However, as with all common law damage outcomes, any damages received by the dependant of a deceased member are recoverable upon receipt of the damages and eligibility to further compensation (including treatment eligibility) under the MRCA can cease or be restricted upon the receipt of the damages.
The restrictions on common law damages against the Commonwealth or a potentially liable member do not apply if a person wishes to pursue common law damages for the non-economic loss effects of a service injury or disease.
This avenue of common law damages is in replacement of Permanent Impairment (PI) compensation payable under sections 68 [4], 71 [4] or 75 [4] of the MRCA (see Chapter 5 [12] of this manual for more information on PI compensation).
Section 389 [4] provides that a member or former member to whom PI compensation is payable, but who has not yet been paid any PI compensation, can institute an action for damages against the Commonwealth or a potentially liable member at common law.
Once the member has elected to commence common law action, the choice is irrevocable and no PI compensation is payable after the date that the choice to sue is made.
The amount of damages at common law is restricted to a maximum of $110,000. This restriction is intended to encourage the claimant to pursue the compensation outcomes available under the MRCA, rather than at common law.
Any amount awarded is for pain and suffering (non-economic loss) only and compensation payments other than PI compensation will remain payable only under the MRCA (e.g. incapacity payments).
The claimant should be advised that they are required to notify DVA in writing should they wish to pursue common law action rather than accept compensation under the MRCA.
Delegates must be mindful to inform the claimant that if no advice is received, they will be put into payment as though they have accepted the compensation, therefore losing the right to sue for non-economic loss.
Once PI compensation has been paid under the MRCA, the claimant loses their right to pursue common law action for non-economic loss.
If a dependant of a deceased member wishes to pursue common law damages against the Commonwealth or a potentially liable member related to the service death they are not restricted.
However, if the dependant recovers damages related to the service death then subsections 388(5)&(6) apply. These provisions require the dependant to repay the Commonwealth the lesser of either the amount of compensation already paid to the person related to that service death or the amount of damages awarded.
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 for:
These payments are specifically excluded from the amount of compensation recovered due to the influence of case law establishing that an expense for some cost incurred, allowances to cover expenses and reimbursements for costs incurred are not to be quantified for the purposes of general damages recovery, (Freudhofer v Poledano [1972] VR 287, Byron v Australian Capital Territory [1999] ACTSC 44). Also, compensation payable to the dependants (not instituting the action) is not to be quantified in this sense either, hence the exclusion of dependant compensation.
Also once the person has been awarded any damages related to the service death, further compensation under the MRCA related to that death is no longer payable, including the excluded payments (listed above) from the recovered amount
Subsection 388(6) [4] states that “Compensation under this Act in respect of a service death is not payable to the dependant after the recovery of the damages”. Section 5 [4] of the MRCA defines “compensation” to include medical treatment provided under Chapter 6. Accordingly subsection 388(6) [4] precludes the plaintiff from receiving any compensation, including compensation for treatment provided under Chapter 6. This has the effect of removing a person's eligibility for a Repatriation Health Card for all conditions (Gold Card) that may have been issued to the dependant following the service death. In the event that the dependant had a personal entitlement to compensation and health care (unrelated to the service death) and had been issued with a Repatriation Health Card for specific conditions (White Card) then this entitlement would remain.
While there is no legislative requirement for the claimant to advise that they intend to sue the Commonwealth, subsection 390(2) states that the claimant must advise the MRCC of a claim under common law not later than 7 days after the common law claim is lodged. This requirement is to allow for the proper application of any restrictions or cessations of compensation under the MRCA.
The need for this requirement to be met is to be communicated strongly in any communication that the delegate has with the claimant. Currently there are comment boxes and notes on the D2051 MRCA claim form highlighting the need for the claimant to inform DVA of any common law action or awards damaged. However, there is no mention of the sanctions that are imposed for a failure to meet these requirements.
Subsection 390(3) [16] provides that a failure to notify the MRCC within the 7 day time period is an offence and carries a penalty of 5 penalty units (one penalty unit stands at $210 as of 1 July 2017. However, the amount of the penalty unit is automatically indexed every three years in line with inflation. The indexation occurs by reference to the March quarter CPI figures of the year in which indexation occurs. Hence the amount of a penalty unit will increase over time). This offence is also identified as an offence of strict liability by subsection 390(4) [16].
Strict Liability
An offence of strict liability, such as that committed by a failure to notify the MRCC of a common law action, is used to remove any fault elements from the action that causes the offence.
In plain terms, this means that if a claimant fails to inform the MRCC within the 7 day timeframe, they are guilty of an offence and the defence of a lack of knowledge, intention, recklessness or negligence does not stand. The prosecution does not need to prove fault for an offence of strict liability.
For example, if a claimant failed to notify the MRCC within the 7 day timeframe and the delegate pursued the penalty, the claimant could not claim that they were unaware of the requirement to notify the commission as a valid defence.
An offence of strict liability is prescribed by section 6.1 of the Criminal Code Act 1995.
There is an avenue of defence against an offence of strict liability, that being a mistake of fact. This is where the claimant before or at the time of the conduct (the failure to notify the MRCC) had considered whether or not facts existed about that action, and as a result is under a reasonable but mistaken belief about those facts. If those mistaken facts had existed, the conduct would not have constituted an offence.
Simply put, if the claimant can prove that at or before the time of not notifying the MRCC of the common law action they had considered the ramifications of not notifying the MRCC, and had come to a reasonable (though mistaken) conclusion that it wasn't required, then they are not guilty of committing the offence under subsection 390(3) [16]. This lack of guilt would have to be contested in court, with the reasonable nature of the claimant's misconception being accepted by the court and the prosecution failing to negate the hypothesis.
A mistake of fact is described in section 9.2 of the Criminal Code Act 1995.
Part 3 of Chapter 10 [4] of the MRCA deals with a situation where a member or former member was injured, contracted a disease, suffered damage to, or loss of, a medical aid or died as a result of their service (the 'cause of action'), and a third party appears to be liable to pay damages. In this situation, the member or former member, their dependants, legal personal representative or the MRCC may instigate common law action against that third party. Also, the MRCC can take over an existing claim against a third party once that claim has been instigated.
These provisions are designed to allow for a compensation outcome for an affected party to be sought where the liability for the injury, disease or death does not fully lie with the Commonwealth. The conditions that led to the cause of action must still have the necessary causal connections to ADF service, however, through the actions or inaction of a third party, liability rests with that third party.
Unlike actions against the Commonwealth, that are restricted to actions for non-economic loss and actions by dependants, a third party common law action can pursue damages for all aspects of the cause of action. This in turn has different impacts on the claimant's access to compensation or benefits under the MRCA. If damages are recovered, access to certain forms of compensation (including treatment eligibility) cease or are restricted under the MRCA and compensation that has already been paid will be recovered.
For the above reasons, it is imperative that a delegate fully informs a claimant of the impacts of a third party claim on their entitlements and access to further compensation under the MRCA.
While there is no legislative requirement for the claimant to advise that they intend to sue a third party, subsection 391(2) [19] states that the claimant must advise the MRCC of a claim under common law not later than 7 days after the third party common law claim is lodged. This requirement is to allow for the proper application of any restrictions or cessations of compensation under the MRCA.
The need for this requirement to be met is to be communicated strongly in any communication that the delegate has with the claimant. Currently the D2051 claim form has a question at point 23 that asks whether the claimant has or intends to claim common law damages against the Commonwealth or a third party. While this question can be used to determine whether there is a claim for the Commonwealth to make or take over, it is not legislatively required for the claimant to fill this out if they intend to claim but haven't yet done so. However, the requirement for the claimant to inform the MRCC of any actual claim made is still to be fulfilled.
Subsection 391(3) [19] provides that a failure to notify the MRCC within the 7 day time period is an offence and carries a penalty of 5 penalty units. Since 1 July 2017, one penalty unit is $210. However, the amount of the penalty unit is automatically indexed every three years in line with inflation. The indexation occurs by reference to the March quarter CPI figures of the year in which indexation occurs. Hence the amount of a penalty unit will increase over time. This offence is also identified as an offence of strict liability by subsection 391(4) [19].
For an explanation of an offence of strict liability see 4.2.4 [20].
Division 3 of Part 3 of Chapter 10 [22] 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 [23] 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.
Similar to the requirement of a person to inform the MRCC of the lodgement of a claim for common law damages, section 400 [24] 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 [20].
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 [23]), 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:
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.
Under section 402 [30], 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 [31] of the MRCA defines “compensation” to include medical treatment provided under Chapter 6. Accordingly subsection 402(2) [30] 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 [30] 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:
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.
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.
Division 2 of Part 3 of Chapter 10 [4] of the MRCA allows for the MRCC to instigate or take over a third party common law claim for damages.
4.3.2 deals with the recovery of compensation from a third party by the person or the dependant themselves.
These provisions are designed to allow for the affected person to receive compensation from the third party in substitution to the compensation available under the MRCA. Unlike the prohibition of common law claims against the Commonwealth when the Commonwealth has sole liability for a cause of action, the third party provisions allow for damages to be pursued through common law to prevent the Commonwealth from paying compensation when the cause of action creates a legal liability for a third party other than the Commonwealth or a potentially liable member. An example of this would be when a member is travelling home from duty and is run into by another person in their car, creating a liability on the driver of the other car.
In these circumstances, where the affected party has not made a claim against the liable third party, or has made a claim but not prosecuted it (ie lodged the intention to sue with the courts but has not had a hearing), the MRCC can either commence a claim or take over the conduct of the existing claim.
When the delegate becomes aware that there is a common law action that might be instigated or taken over by the MRCC, they must contact the Director of the Benefits, Payments and Rehabilitation Policy section, as the MRCC alone has the power to instigate this action and must be done through liaison with Business Integrity and Legal Services Group.
Delegates may be made aware of the potential for a third party claim either by the information provided surrounding the nature of the incident that led to the accepted condition or where the claimant has indicated that they intend to or have already instigated common law action on the approved claim form.
Once the MRCC decides that a claim against a third party can be commenced or taken over there are certain legislative requirements that must be met by certain parties.
Signing of Documents and Actions Required.
The person (the plaintiff) who would have had the right to claim against the third party is required by sections 396 [4] and 397 [4] of the MRCA to sign any document required by the MRCC to pursue the claim and also to undergo any reasonable request that the MRCC may put on them in order to pursue the claim. These requirements do carry sanctions if the plaintiff fails or refuses to comply.
If the plaintiff refuses to sign a document required by the MRCC, the MRCC can apply to the tribunal or court hearing the matter, or the Federal Court if otherwise, to have a person appointed by the MRCC made eligible to sign the document on the plaintiff's behalf. If this course of action is taken the MRCC must inform the plaintiff in writing that it is doing so and allow the plaintiff to be represented at the hearing.
If the plaintiff fails or refuses to comply with a reasonable request for action from the MRCC in relation to the pursuit of common law damages, then the MRCC can suspend the plaintiff's right to compensation under the MRCA until they do comply.
Note carefully that the suspension of compensation that can be made does not affect the plaintiff's right to treatment or compensation for treatment under Chapter 6.
In order for this suspension to be enforced the MRCC must ensure that they have informed the plaintiff of this course of action and given them adequate time to give evidence of a reasonable excuse for a failure to act. If this excuse is accepted, then a suspension of compensation cannot be enforced.
When a plaintiff's compensation is suspended under section 397 [4] a determination must be made of an end date to the suspension if the plaintiff provides a reasonable excuse for failure within 14 days of the date set for compliance with the request. Once a plaintiff provides such evidence a delegate, that is required by subsection 397(4) [4] to be a different delegate to the one that applied the suspension, can determine a reinstatement of the plaintiff's right to compensation.
If the person subsequently complies with the request, their entitlement to compensation is reinstated under subsection 397(1) [4].
Legal Proceedings and Costs
If the MRCC instigates a claim against a third party, then all associated costs are to be met by the Commonwealth. However, if the MRCC takes over the conduct of an already existing claim, then the Commonwealth is liable to pay the costs of, or incidental to, the claim that would normally have been paid by the plaintiff, such as investigation or lodgement fees. These costs do not extend to costs that the plaintiff incurred that are considered unreasonable for the prosecution of the claim such as excessive investigation or unreasonable travel costs.
In relation to the actual conduct of the prosecution of the claim, the MRCC is empowered by section 395 [4] to undertake any steps deemed necessary to conclude the claim. This can be effected by settling a claim with or without a judgement if it is before a court, and if a judgement is received in favour of the plaintiff taking any necessary steps to enforce the judgement.
Damages Awarded
Once a judgement has been passed or a settlement reached that is in favour of the plaintiff, any damages awarded are payable to the Commonwealth when the MRCC has instigated or taken over a claim.
Once the Commonwealth has received the damages a number of calculations must be made.
If the plaintiff has been paid compensation under the MRCA in relation to the relevant cause of action then the amount of that compensation (including the cost of any treatment or rehabilitation provided) is to be deducted from the damages amount. The amount so deducted is not to include the following compensation amounts:
Once these amounts have been calculated the total is to be deducted from the damages recovered. If a positive balance remains then the balance has to be paid to the plaintiff. However, once this balance is paid to the plaintiff, the plaintiff is not entitled to any further compensation under the MRCA until the compensation related to the cause of action pursued that would have been paid equals the balance that was paid to the plaintiff.
This is to ensure that the plaintiff is not compensated twice for the same injury, disease, death or loss, or damage to, a medical aid and that the damages recovered and paid to the plaintiff are in lieu of any compensation that would have been paid to them under the MRCA.
This would require the recall of a person's treatment card or cessation of payment for treatment costs and the person to provide evidence of treatment accessed and paid for. The delegate will need to keep records of other compensation that would have been paid but for the receipt of damages. This would include calculation of incapacity payments, SRDP etc until the balance of the damages is exhausted.
Where a person successfully recovers common law damages related to a MRCA compensable cause of action, and as a result loses their treatment eligibility, along with their other compensation related to that cause of action, then there are questions around whether other treatment eligibility under the Veterans' Entitlements Act 1986 (VEA) could compensate them for those conditions.
If a person was to be prevented from receiving MRCA treatment compensation for a condition after successful common law action, there could be a situation where their coverage under a VEA Gold Card could conceivably provide them with Commonwealth funded treatment for those conditions.
Given there is no existing functionality to prevent the use of a Gold Card for certain condition/s, this will mean that the client’s future card usage will need to be monitored on a regular basis to ensure compliance with section 402(2). This may require the client to examine future expenditure lists, itemise any treatment related to his damages claim (if applicable) and repay further amounts. The client should also be asked to acknowledge this limitation.
Division 4 of Part 3 of Chapter 10 [4] of the MRCA deals with a situation where a person other than the Commonwealth or a potentially liable member is liable to pay damages to a plaintiff in respect of an injury, disease, death or loss, or damage to, a medical aid (the 'cause of action') that would otherwise be compensable under the MRCA. In these circumstances, the MRCC can require the person to pay the damages to the Commonwealth to allow for the appropriate recovery of the plaintiff's debt under Chapter 10 [4] of the MRCA.
Under section 403 [4] the MRCC can issue a notice requiring the defendant to repay the lesser of the amount of damages and the compensation already paid to the plaintiff (minus the inclusions mentioned in 4.3.2 [35]) to the Commonwealth.
This notice only has effect if it is made before all the damages are paid to or for the benefit of the plaintiff. If part of the damages have been paid, then the defendant is liable to pay the amount that has not been paid.
If the defendant fails to pay the requested damages to the Commonwealth, then the MRCC can pursue the payment of the requested amount in a court of competent jurisdiction. This amount then becomes a debt to the Commonwealth.
Once the defendant has paid the amount requested, that person's liability to the plaintiff and the Commonwealth is discharged.
Chapter 10 [37] of the MRCA outlines four different scenarios where common law action may be taken against the Commonwealth or a third party, and the resultant impacts:
The following table summarises these four scenarios:
| Common law damages | Compensation recoverable by the Commonwealth | Compensation ceased | Compensation continued and not recoverable by the Commonwealth |
Dependant successfully sues the Commonwealth in respect of a death (s388) | No limit. | The lesser of: amount of damages awarded or total amount of compensation paid under the Act relating to the death. | All future benefits, including medical treatment (e.g. Gold Card) related to the death. | MRCA supplement, bereavement payment and eligible young person payments. |
Member sues the Commonwealth for non-economic loss before PI is paid (s389) | Damages limited to $110,000. | N/A
| No PI compensation paid in respect of the cause of action as soon as choice to undertake common law action is made. | Does not affect any compensation other than PI. |
MRCC takes over or institutes proceedings against a third party (s392-398) | No limit. | The balance of compensation paid prior to the settlement, including costs to the claim. | All future benefits, including medical treatment UNTIL amount of compensation that would have been payable under the Act exceeds the amount of the settlement. | None UNTIL amount of compensation that would have been payable under the Act exceeds the amount of the settlement. But MRCA supplement, bereavement payment and eligible young person payments will continue. |
Person or a dependant recovers damages from a third party (s401-402) | No limit. | The lesser of: amount of damages awarded or total amount of compensation paid under the Act relating to the cause of action. | All future benefits, including medical treatment. | MRCA supplement, bereavement payment and eligible young person payments. |
Any successful actions brought against the Commonwealth in respect of a service death bring the provisions of subsections 388(5) [4] and 388(6) [4] into effect.
Subsection 388(5) [4] requires recovery of the lesser amount of either the amount of damages awarded or the total amounts of compensation paid under the Act relating to the death (excluding any payments for MRCA Supplement under section 245 [4], bereavement payments under sections 242 [4] and 255 [4], and weekly compensation for eligible young persons under section 253) [4].
Subsection 388(6) [4] states that “Compensation under this Act in respect of a service death is not payable to the dependant after the recovery of the damages”. Section 5 [4] of the MRCA defines “compensation” to include medical treatment provided under Chapter 6. Accordingly subsection 388(6) [4] precludes the plaintiff from receiving any compensation, including compensation for treatment provided under Chapter 6. This has the effect of removing a person's eligibility for a Repatriation Health Card for all conditions (Gold Card) that may have been issued following the service death. In the event that the dependant had a personal entitlement to compensation and health care (unrelated to the service death) and had been issued with a Repatriation Health Card for specific conditions (White Card) then this entitlement would remain.
Section 389 [4] provides that a member or former member to whom PI compensation is payable, but who has not yet been paid any PI compensation, can institute an action for damages against the Commonwealth or a potentially liable member at common law.
Once the member has elected to commence common law action, the choice is irrevocable and no PI compensation is payable after the date that the choice to sue is made. Similarly, if PI compensation has already been paid, no common law action can be undertaken.
This common law action for non-economic loss does not affect any compensation other than PI compensation.
The amount of damages at common law is restricted to a maximum of $110,000. This restriction is intended to encourage the claimant to pursue the compensation outcomes available under the MRCA, rather than at common law.
Subsections 398(2) [4] and 398(3) [4] define what is recovered and what compensation is payable if the MRCC successfully takes over or institutes proceedings against a third party.
Subsection 398(2) [4] requires recovery of all compensation paid prior to the settlement (excluding any payments for MRCA Supplement under sections 221 [4] and 245 [4], bereavement payments under sections 242 [4] and 255 [4], and weekly compensation for eligible young persons under section 253) [4]. The recovery provisions also include any costs incidental to the claim such as the cost of arranging an independent medical assessment for the purpose of assessing liability or eligibility for compensation.
Subsection 398(3) [4] operates in the same manner as subsection 388(6) [4], insofar as it precludes a plaintiff from receiving any compensation, including treatment under Chapter 6, following receipt of common law damages or a settlement amount. The significant difference is that (under subsection 398(3)) [4] compensation becomes payable again when the amount of compensation that would have been payable under the Act exceeds the amount of the settlement. Hence, the plaintiff's entitlement to compensation, including treatment, will only cease during the period that the settlement amount exceeds the amount of compensation payable.
This situation is similar to subsection 388(5) [46] of MRCA, however the person is suing a third-party and not the Commonwealth. If a person institutes proceedings against a third party, subsection 401(2) [46] defines what compensation is recovered and subsection 402(2) [46] provides that compensation is no longer payable after a person successfully sues a third party and recovers damages.
The amount to be repaid is the lesser of the amount of compensation already paid to the person (in relation to that cause of action) and the amount of damages awarded.
Section 5 [46] of the MRCA defines “compensation” to include medical treatment provided under Chapter 6. Accordingly subsections 401(2) [46] and 402(2) [47] preclude the plaintiff from receiving any compensation, including compensation for treatment provided under Chapter 6, and any treatment at the expense of the Department previously received is recoverable.
Impairment points are not considered ‘compensation’ under the MRCA. The impairment points are the mechanism used to establish the amount of permanent impairment compensation payable. The GARP M is the guide which is prepared for the purpose of assessing impairment expressed as impairment points, and it makes no special provision for the assessment and combining of impairment points where there has been third party compensation received. Therefore the total permanent impairment points resulting from all compensable conditions should be calculated for threshold purposes only (including those which damages were received for) however the assessment of compensation payable should preclude any impairment for the same ‘cause of action’ for which damages were received.
Compensation for MRCA Supplement under section 221 [46] or 245 [46], bereavement payments under section 242 [46] and 255 [46] (where the deceased member of former member was in receipt of periodic payments for permanent impairment compensation), and section 253 [46] (for weekly compensation to eligible young persons) continues after the date on which the damages are recovered by the person. Additionally, these payments are not included in the amount of compensation to be repaid under subsection 401(2) [46].
Section 402 does not have the effect of ceasing liability under the MRCA for the same cause of action that is subject to a third party settlement. As such the compensable conditions (for which damages have been received) and their related impairment are still recognised under the MRCA. This will mean that impairment points for all the accepted conditions will count towards the eligibility for MRCA benefits, however the payment of compensation (including permanent impairment, incapacity payments and treatment) is precluded in respect of the condition covered in the award of damages.
The same ‘cause of action’ requires not only a commonality of the compensable condition, but also a commonality of incident, that is the condition must arise out of the same inciting event as the condition/s which are accepted under MRCA.
Medical opinion may be sought from the treating medical practitioner or from a contracted medical advisor to assess the compensable conditions under MRCA and what conditions have been included in the settlement awarded to the client by the third party.
A client requests to be assessed for permanent impairment (PI) compensation under MRCA, the client has a number of accepted service-related conditions, where two conditions were caused by a motor vehicle accident. The client has also received a third-party settlement with respect of the motor vehicle accident. Therefore the impairment with respect of the same cause of action (injuries and associated impairment as a result of the accident) is not compensable under MRCA should not be included for the purposes of calculating the PI compensation.
Where third party damages are received it must be clarified that impairment points are not compensation and are not recoverable pursuant to section 401. Therefore the overall impairment points rating for all compensable conditions should be assessed and awarded for other thresholds and benefits under the MRCA. See 12.7.2 [48] for more information about the relevant thresholds for other benefits. That is, if the impairment rating for all compensable conditions (including those subject to the common law action) reach the required threshold for SRDP (50 impairment points) or the Gold Card (60 impairment points) the client will be entitled to receive the benefit. However the use of the DVA Gold Card is not to be used to obtain treatment for the conditions which have been compensated for by the third party. See below for information about treatment.
The same client submits a claim for incapacity payments under MRCA as they are currently unfit for work due to their accepted conditions. The client's ongoing incapacity for work is due to two of their accepted service-related codntiions, and on of the conditions is related to the motor vehicle accident, and the other is a psychological injury relating to their service. As this client has received a third party settlement with respect of the motor vehicle accident, the client will either be:
The person would be precluded from receiving treatment using their DVA Health Care Card for the two motor vehicle injuries. Where the client has an overall impairment point rating assessed as part of the Permanent Impairment compensation claim, if they reach the threshold for a Gold Card (i.e. 60 points overall for all compensable conditions) the impairment points continue to apply and the client will be entitled to receive the Gold Card, however is precluded from obtaining treatment with respect of the conditions for which the damages were received. Similarly if the client already has a Gold Card prior to the third party settlement, they will not lose entitlement to the card as impairment points are not considered compensation that is recoverable pursuant to section 401.
A Delegate should ensure there are notes relating to the settlement and conditions which are precluded from compensation under MRCA on the client’s file for ongoing management of the client’s benefits and future claims.
The client however would continue to be entitled to receive the MRCA supplement.
Where a settlement payment has resolved a claim and liability has not been admitted as part of the settlement, offsetting and compensation recovery provisions across the three Acts will still apply.
Provided that an employee recovered an amount for an incapacity/injury/cause of action under a settlement arrangement, we do not consider the terms on which the settlement is prepared, including whether or not there is an admission of liability will impact on the application of the relevant sections of the VEA, MRCA or DRCA. Further, neither the VEA, MRCA or DRCA require an admission of liability in order to take an amount paid into account in relation to the application of the relevant offsetting/compensation reduction provisions. In relation to VEA specifically, the VEA regards a compromise or settlement of a claim for damages to be compensation (see s30B(c) of the VEA).
It can be difficult to ascertain the specific incapacitates that are referrable to a vaguely-worded settlement deed, but where claims for damages have been made at common law, we would expect:
Any payments received via settlement of private insurance matters will not affect a client’s entitlement to either permanent impairment or incapacity compensation under the MRCA and there is no requirement to “offset” these payments against any MRCA benefits (as occurs with payments for common law damages).
Refer to Chapter 2 of the handbook “Claims” for more information on the definition of private insurance benefits and the basis for excluding them from the recovery provisions contained in the Act.
Reparation Payments made by the Defence Abuse Response Taskforce (DART) under the Defence Abuse Reparation Scheme are not compensation payments. Receipt of a Reparation Payment does not require the recipient to waive any legal rights and does not affect her or his right to take other action or access other entitlements. Reparation Payments therefore have no impact on liability or compensation under the MRCA.
Links
[1] https://clik.dva.gov.au/user/login?destination=comment/reply/18800%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=comment/reply/18807%23comment-form
[3] https://clik.dva.gov.au/legislation-library
[4] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-mrca
[5] https://clik.dva.gov.au/book/export/html/18800#tgt-mmrca_chap4_ftn1
[6] https://clik.dva.gov.au/book/export/html/18800#ref-mmrca_chap4_ftn1
[7] https://clik.dva.gov.au/user/login?destination=comment/reply/18806%23comment-form
[8] https://clik.dva.gov.au/user/login?destination=comment/reply/18794%23comment-form
[9] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/42-common-law-action-against-commonwealth-or-potentially-liable-member/422-action-damages-against-commonwealth-or-potentially-liable-member-non
[10] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/42-common-law-action-against-commonwealth-or-potentially-liable-member/423-action-damages-related-service-death
[11] https://clik.dva.gov.au/user/login?destination=comment/reply/18793%23comment-form
[12] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-5-permanent-impairment
[13] https://clik.dva.gov.au/user/login?destination=comment/reply/18791%23comment-form
[14] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[15] https://clik.dva.gov.au/user/login?destination=comment/reply/18796%23comment-form
[16] clik://LEGIS/MRC-ACTS/MRCA/S390
[17] https://clik.dva.gov.au/user/login?destination=comment/reply/18795%23comment-form
[18] https://clik.dva.gov.au/user/login?destination=comment/reply/18804%23comment-form
[19] clik://LEGIS/MRC-ACTS/MRCA/S391
[20] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/42-common-law-action-against-commonwealth-or-potentially-liable-member/424-notification-common-law-actions
[21] https://clik.dva.gov.au/user/login?destination=comment/reply/18801%23comment-form
[22] clik://LEGIS/MRC-ACTS/MRCA/Ch 10/Pt 3/Div 3
[23] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/43-liability-third-parties-and-access-common-law-actions-against-third-party/433-mrcc-instituting-or-taking-over-common-law-action-against-third
[24] clik://LEGIS/MRC-ACTS/MRCA/S400
[25] clik://LEGIS/MRC-ACTS/MRCA/S221
[26] clik://LEGIS/MRC-ACTS/MRCA/S245
[27] clik://LEGIS/MRC-ACTS/MRCA/S242
[28] clik://LEGIS/MRC-ACTS/MRCA/S253
[29] clik://LEGIS/MRC-ACTS/MRCA/S255
[30] clik://LEGIS/MRC-ACTS/MRCA/S402
[31] clik://LEGIS/MRC-ACTS/MRCA/S5
[32] https://clik.dva.gov.au/user/login?destination=comment/reply/18805%23comment-form
[33] https://clik.dva.gov.au/user/login?destination=comment/reply/18790%23comment-form
[34] https://clik.dva.gov.au/user/login?destination=comment/reply/18803%23comment-form
[35] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/43-liability-third-parties-and-access-common-law-actions-against-third-party/432-entitlements-affected-third-party-common-law-action
[36] https://clik.dva.gov.au/user/login?destination=comment/reply/18792%23comment-form
[37] clik://LEGIS/MRC-ACTS/MRCA/Ch 10
[38] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/45-summary-recovery-and-compensation-provisions-following-successful-common-law-action/451-where-dependant-successfully-sues-commonwealth-respect
[39] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/45-summary-recovery-and-compensation-provisions-following-successful-common-law-action/452-where-member-sues-commonwealth-or-potentially-liable
[40] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/45-summary-recovery-and-compensation-provisions-following-successful-common-law-action/453-where-mrcc-takes-over-or-institutes-proceedings-against
[41] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-4-liabilities-arising-apart-act/45-summary-recovery-and-compensation-provisions-following-successful-common-law-action/454-where-person-or-dependant-recovers-damages-third-party
[42] https://clik.dva.gov.au/user/login?destination=comment/reply/18799%23comment-form
[43] https://clik.dva.gov.au/user/login?destination=comment/reply/18797%23comment-form
[44] https://clik.dva.gov.au/user/login?destination=comment/reply/18798%23comment-form
[45] https://clik.dva.gov.au/user/login?destination=comment/reply/18802%23comment-form
[46] https://www.legislation.gov.au/Series/C2004A01285
[47] http://www.legislation.gov.au/Series/C2004A01285
[48] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-12-transitional-provisions/127-transitional-provisions-permanent-impairment/1272-total-impairment-rating