Where there is an amount of permanent impairment (PI) compensation determined payable to a client under section 24 or 25, the Commission is required to pay this amount within 30 days if the Commission is to avoid paying interest. There is no statutory timeframe attached to a s45 action for damages election, however given that there is a statutory timeframe associated with the payment of PI every effort should be made to meet this timeframe once an election form has been returned to DVA electing to take the PI compensation. Where no response has been received in relation to a s45 choice (i.e. where the election form has not been returned) it is appropriate for the delegate to make contact with the client with a view to identifying any difficulties the client may be having in reaching a decision. While delegate discretion can be used to delay payment if a client is uncontactable and doubt exists over their intention to accept compensation or take action for damages, payments should not be delayed indefinitely. If all practical efforts have been made to contact the client and ascertain the election choice without success, the payment can be made if this is considered reasonable.
If the compensation payment is delayed beyond 30 days then, under section 26, interest is payable from the day the 30 day period elapses to the date of the payment. The interest rate payable is the “weighted average yield of 3 month Bank Accepted Bills/Negotiable Certificates of Deposit, over 3 months, as published by the Reserve Bank of Australia, settled immediately prior to the last day of the thirty day settlement period”. This rate is available from the Reserve Bank's website via the following link:
http://www.rba.gov.au/statistics/tables/index.html#interest-rates [3]
This is the easiest way to access the applicable interest rate on any day. Once in the spreadsheet, scroll down to the latest daily rate and look across under the column 3-month BABs/NCDs (description - Bank Accepted Bills/Negotiable Certificates of Deposit - 3 months) which gives you the weighted average yield of the end of day bank bill rate.
If the link above does not work, go to the RBA [4] website. Once there, click onto “Statistics” located along the top of the screen. Click on ‘Economic and Financial Statistics”, and then "Statistical Tables" then scroll down to "Interest Rate" and click on "Interest Rates and Yields - Money Markets - Daily - F1".
Example of calculating an interest payment
1. RBA interest rate ÷ 100 = interest rate percentage
2. Interest rate percentage x section 24 award amount = yearly amount
3. Yearly amount ÷ 365 = daily amount
4. Daily amount x number of days late = amount payable
Example:
Interest rate: 4.75%
Section 24 award amount: $12,706.00
Days late: 168
Occasionally, a client may request that DVA process their Permanent Impairment (PI) payment to their nominated overseas bank account. The preferred method is always to pay clients residing overseas in $AU to an Australian bank account. However, if this is not possible, arrangements can be put in place for a payment to the client’s overseas bank account. This is managed through the Accounts Payable Team in the Finance and Property branch within the Business Support Services division.
The Claim for Payment form should be used to organise this method of payment. This form can be accessed via TRIM - 15573323E [6] or on the Finance and Resources Forms page [7] on the intranet.
Please note the following:
Once an examination has been completed to assess the level of impairment and effect on the non economic factors of the client thus resulting in an amount of calculation of compensation payable, a letter of offer is sent to those clients with compensation offsetting impacts and a determination letter to all other clients.
It is at this time that the client may decide to choose to reject the compensation and institute civil proceedings for damages against the Commonwealth. This is known as the Section 45 election, with there being no legislative requirement for the client to make this optional election unless they intend to pursue civil proceedings against the Commonwealth. In the strict letter of the legislation, once a decision to institute civil proceedings is made in writing and provided to the Commission, it is irrevocable. Equally, once a Permanent Impairment payment is paid then a section 45 election for that condition is no longer available to the client. Determination and offer letters sent to clients in relation to this should be very clear in stating their choices and the implications of each option.
For clients that receive an offer (as they have compensation offsetting/recovery considerations) notional clearances are sought from the VEA benefits part of the Department. The client will be "offered" an "estimate" lump sum of PI compensation payable with the letter also outlining the impacts of any applicable VEA compensation offsetting/recovery. The client can, at any time before the PI lump sum is paid, advise that they wish to institute civil proceedings under s45 as outlined above. If the client makes this election to sue their eligibility to receive permanent impairment for that condition ceases permanently.
Section 45 of the SRCA permits employees eligible for compensation under Ss24, 25 or 27 to institute proceedings against the Commonwealth, Commonwealth authority, licensed corporation or other employee before any payment is made under these sections.
Should such action be taken no permanent impairment payment is to be made. The file, including R&C ISH records are to be noted that civil action has been instituted and the clients legal representative informed of the overall interest DVA has in the proceedings.
Where damages have been recovered in respect of a 1971 Act injury, section 99 of that Act provides that the person is required to repay the compensation paid to the date of settlement (in respect of that injury). The settlement money left over is offset against future compensation entitlements. However if the person can show evidence the settlement money has been exhausted on injury-related costs, they will again be entitled to compensation. See Chapter 48 of the General Handbook for more information.
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A correction is necessary where an earlier calculation of PI compensation was incorrect and a new, correct amount has been calculated. This could occur, for example, where:
A deduction for a correction should be distinguished from a deduction for:
It is important not to describe an amount as a correction when it arises from a miscalculation of another form of compensation, e.g. incapacity or reimbursement of medical expenses. Errors of this nature should be treated as overpayments.
There are two ways in which a PI case that requires correction may be assessed:
An interim payment of compensation for permanent impairment can be made where the impairment is 10% or more but a final assessment of the degree of impairment has not been made (e.g. because the degree of impairment is not yet stable). See Chapter 4 [16] for more detail.
When a further assessment is made (whether a reassessment or a final assessment), the amount already paid on an interim basis is deducted from the new total compensation entitlement.
A deduction for an interim payment should be distinguished from a deduction for:
Payment of interim lump sum payments under S25(1) requires a specific written request from the injured employee. An interim lump sum payment could only be paid in such circumstances were the client has had the opportunity to complete and return the Section 45 election form. This is usually 21 days from when the client is sent the interim lump sum determination letter and allows time for the client to consider the Section 45 election. the letter should indicate that the PI interim lump sum will be paid by default between 21 - 30 days unless the client advises otherwise. See Chapter 6.7.1 "DVA Clearance" [17] for more information.
Section 114 of the SRCA gives the MRCC the authority to recover an overpayment of compensation paid to a client. Section 114(1) makes an overpayment recoverable as a debt in a Court, while S114(2) authorises the recovery of the overpayment from another amount of compensation payable to the client.
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Before making a deduction for an overpayment, the delegate should ensure that the decision to raise an overpayment and to recover it from a payment of compensation for permanent impairment has been correctly made and is properly documented on the file.
A deduction for an overpayment should be distinguished from a deduction for:
The SRCA recognises that some members of the Defence Force may have an entitlement to compensation under the SRCA and also under the VEA or the MRCA. However, in such cases, S115 of the SRCA, Division 5A in Part II of the VEA and S74 of the VEA come into operation to prevent double payment of compensation.
Before a payment of PI compensation is made, the delegate must ensure that all relevant clearances have been received.
The general presumption is that where a veteran is in receipt of a VEA Disability Compensation Payment (DCP), a clearance should be sent to the Offsetting and Manual Payments team to determine whether offsetting applies. Where the veteran is receiving a VEA Disability Compensation Payment at the Intermediate Rate, Special Rate (TPI) or Temporary Special Rate a clearance is always required.
Compensation offsetting under the VEA is the process of reducing one compensation payment in recognition of another compensation payment for the same incapacity. Incapacity means the overall effect of an injury or disease. The same injury or disease accepted under the VEA may be medically diagnosed in a different way when accepted under the DRCA. If the DRCA condition contributes to the same incapacity as your VEA condition, then offsetting applies. The underlying principle behind these provisions is that a person should not be compensated twice for the same incapacity, when a person in a similar circumstance can only receive one source of compensation if only eligible from that source. It is up to the Offsetting and Manual Payments team to determine whether the incapacity is the same.
The only situation where a clearance is not required where a client is in receipt of a general rate VEA Disability Compensation Payment, is when it is abundantly clear that compensation will not be paid for the same incapacity under the DRCA as under the VEA. The following examples demonstrate this situation:
Examples of where a clearance is not required
1. The veteran has hearing loss and tinnitus accepted under the VEA and lumbar spondylosis accepted under the DRCA. The veteran is in receipt of 10% DCP under the VEA for hearing loss and tinnitus. The veteran claims permanent impairment (PI) compensation for lumbar spondylosis under the DRCA and the delegate decides the veteran is eligible for PI.
2. The veteran has PTSD accepted under the VEA, sprain of the right knee and dislocation of the left shoulder accepted under the DRCA. The veteran is in receipt of 50% DCP under the VEA for PTSD. The veteran claims PI compensation for the right knee condition under the DRCA and the delegate decides the veteran is eligible for PI.
3. The veteran has osteoarthritis of the left knee and right knee and non-melanotic neoplasm of the skin accepted under VEA and an amputation of the right ring finger accepted under the DRCA. The veteran is in receipt of 40% DCP under the VEA for osteoarthritis of the left knee and right knee and non-melanotic neoplasm. The veteran claims PI compensation for the finger amputation under the DRCA and the delegate decides the veteran is eligible for PI.
As a general rule, in the majority of cases a clearance will be required from the Offsetting and Manual Payments team where the veteran is in receipt of a VEA DCP and subsequently is eligible for DRCA PI. Where the veteran is in receipt of DCP at above the general rate, a clearance will always be required. The above three examples demonstrate situations where it is absolutely clear compensation will not be paid for the same incapacity under the DRCA as under the VEA. In these cases the delegate should place a file note in ISH to demonstrate they have considered offsetting, however are satisfied beyond doubt that offsetting is not required. If there is any doubt, the delegate should defer to the general rule, as above, and request a clearance before proceeding with the DRCA PI claim.
Further information about Offsetting can be found in the Compensation Offsetting Guidelines [26]. 2.7 [27] of this guide discusses offsetting for conditions with different diagnosis with the same incapacity.
For the process to be followed from clearance to payment see 10.7 of the SRCA Permanent Impairment Handbook.
A dual entitlement is unlikely to arise in the following cases:
A dual entitlement may exist in the following cases:
It should be noted that while S115 of the SRCA and S74 of the VEA operate to prevent double payment of compensation in respect of the same injury, no similar arrangements are in place with respect to SIA payments made under the Defence Act.
It should be noted that while S115 of the SRCA and S74 of the VEA operate to prevent double payment of compensation in respect of the same injury, no similar provisions exist in the SRCA to prevent payments both under Ss24, 25 and 27 of the SRCA and the Social Security Act 1991. For this reason, PI payments do not need to be cleared with Centrelink.
Both the SRCA and the VEA have legislative provisions covering offsetting of benefits.
Under the SRCA S115 notes that certain payments made under the VEA are recoverable against payments made under the SRCA. The relevant sections of the VEA include S30C and S74.
Should a SRCA condition be aggravated by MRCA service (i.e. eligible service after
1 July 2004) then the aggravated component is considered to be a MRCA condition e.g. medical treatment comes under the MRCA. For more information, see Chapter 12 of the MRCA Policy Manual.
The operation of Chapter 25 of GARP M allows for injuries already compensated under the SRCA to be offset against the overall impairment and resultant payment under the MRCA PI provisions. The decision in James v Military Rehabilitation and Compensation Commission [2010] FCAFC 95 endorses the operation of this chapter. For more information, see Chapter 5 of the MRCA Policy Manual.
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Payment of compensation for accepted permanent impairment claims is made through the DOLARS system via the determination screen in R&C ISH.
See Permanent Impairment payments and overseas bank accounts [39] for international payments.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/20850%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=node/20896%23comment-form
[3] http://www.rba.gov.au/statistics/tables/index.html#interest-rates
[4] https://www.rba.gov.au/
[5] https://clik.dva.gov.au/tags/lump-sum-interest-payable
[6] trim://15573323E/?view
[7] https://intranet.dvastaff.dva.gov.au/supportingbusiness/financeandresources/finance/Pages/forms.aspx
[8] https://www.oanda.com/currency/converter/
[9] https://clik.dva.gov.au/user/login?destination=node/20794%23comment-form
[10] https://clik.dva.gov.au/user/login?destination=node/20898%23comment-form
[11] https://clik.dva.gov.au/book/export/html/20850#tgt-msrca_pi_hbk_ftn43
[12] https://clik.dva.gov.au/military-compensation-srca-manuals-and-resources-library/general-handbook/chapter-48-summary-compensation-recovery-provisions-following-successful-common-law-action
[13] https://clik.dva.gov.au/book/export/html/20850#ref-msrca_pi_hbk_ftn43
[14] https://clik.dva.gov.au/user/login?destination=node/20795%23comment-form
[15] https://clik.dva.gov.au/user/login?destination=node/20823%23comment-form
[16] https://clik.dva.gov.au/military-compensation-srca-manuals-and-resources-library/permanent-impairment-handbook/ch-4-assessment
[17] https://clik.dva.gov.au/military-compensation-srca-manuals-and-resources-library/permanent-impairment-handbook/ch-6-payment/67-clearances/671-dva-clearance
[18] https://clik.dva.gov.au/user/login?destination=node/20894%23comment-form
[19] https://clik.dva.gov.au/user/login?destination=node/20789%23comment-form
[20] https://clik.dva.gov.au/book/export/html/20850#tgt-msrca_pi_hbk_ftn44
[21] https://clik.dva.gov.au/legislation-library
[22] https://clik.dva.gov.au/book/export/html/20850#ref-msrca_pi_hbk_ftn44
[23] https://clik.dva.gov.au/user/login?destination=node/20923%23comment-form
[24] https://clik.dva.gov.au/user/login?destination=node/20758%23comment-form
[25] https://clik.dva.gov.au/user/login?destination=node/20822%23comment-form
[26] https://clik.dva.gov.au/compensation-and-support-reference-library/compensation-offsetting-guidelines
[27] https://clik.dva.gov.au/compensation-and-support-reference-library/compensation-offsetting-guidelines/2-sources-other-compensation/27-different-medical-labels-diagnosis-same-incapacity
[28] https://clik.dva.gov.au/user/login?destination=node/20834%23comment-form
[29] https://clik.dva.gov.au/user/login?destination=node/20941%23comment-form
[30] https://clik.dva.gov.au/user/login?destination=node/20716%23comment-form
[31] https://clik.dva.gov.au/user/login?destination=node/20783%23comment-form
[32] https://clik.dva.gov.au/book/export/html/20850#tgt-msrca_pi_hbk_ftn45
[33] https://clik.dva.gov.au/book/export/html/20850#tgt-msrca_pi_hbk_ftn46
[34] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-12-transitional-provisions
[35] https://clik.dva.gov.au/book/export/html/20850#ref-msrca_pi_hbk_ftn45
[36] https://clik.dva.gov.au/military-compensation-mrca-manuals-and-resources-library/policy-manual/ch-5-permanent-impairment
[37] https://clik.dva.gov.au/book/export/html/20850#ref-msrca_pi_hbk_ftn46
[38] https://clik.dva.gov.au/user/login?destination=node/20738%23comment-form
[39] https://clik.dva.gov.au/military-compensation-srca-manuals-and-resources-library/permanent-impairment-handbook/ch-6-payment/61-determination-payment-interest-payable/permanent-impairment-payments-and-overseas-bank-accounts