Compensation offsetting is the process of reducing one compensation payment in recognition of another compensation payment for the same incapacity or death. 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. Generally this principle applies to any award of compensation or damages from another source contributing to the same incapacity, for which Disability Compensation Payment is being paid, or the death for which war widow(er)'s pension is paid. In this situation a corresponding reduction or offset is calculated and applied to the Disability Compensation Payment or war widow(er)'s pension to prevent double compensation. A person should not receive dual compensation for an injury, disease or death simply because they have additional eligibility from another source.
These guidelines explain the policy and procedures when offsetting particular payments made under Parts II and IV of the Veterans' Entitlements Act 1986 (VEA [3]). The authority for these guidelines are contained in the following sections of the VEA:
Veterans' Entitlements Act 1986.
These provisions are 'self-executing'. In other words, they operate automatically; there is no discretionary power either to not apply these provisions or to lessen the amount that is to be offset against past and future pension entitlements.
Compensation offsetting applies to the following benefits paid under Parts II and IV of the VEA [3]:
Veterans' Entitlements Act 1986.
Clothing Allowance and Attendant Allowance under sections 97 and 98 of the VEA [3] are not payable if Disability Compensation Payment is fully offset due to compensation offsetting. The reason being, both these sections require that a veteran is being paid a pension under Part II in respect of incapacity from a war-caused injury or war-caused disease. If a pension is being fully offset, it is not taken to be paid. .
Veterans' Entitlements Act 1986.
Other compensation can be received either as a periodic payment or as a lump sum payment from a number of sources. The definitions of compensation to be offset against Disability Compensation Payment are found in subsections 30B(1) and 74(1) of the VEA [3] and include the following:
The cost of treatment provided by the Department is recoverable under section 93 of the VEA. Compensation payments can also impact the amount of certain income support benefits payable under sections 59M to 59ZM
Veterans' Entitlements Act 1986.
Any person who is seeking or who receives a pension payable under the VEA [3] who:
Veterans' Entitlements Act 1986.
Safety, Rehabilitation and Compensation Act 1988
Certain payments are excluded as compensation for the purposes of compensation offsetting:
Veterans' Entitlements Act 1986.
As mentioned above, the Repatriation Commission has had policy in place since 2005 on the exclusion of certain legal costs that a person may incur when pursuing damages or compensation.
Two terms are used when describing costs incurred by an individual who pursues a compensation or damages claim. The first being "party-party" costs and the second "solicitor-client" costs.
"Party-party" costs include all amounts specifically included in any Court judgement, settlement or other compensation payment as "costs".
"Solicitor-client" costs are separate from "party-party" costs and include all other costs that are not specifically included in a settlement or judgement. These costs are a private arrangement between the solicitor and the client and must not be excluded from the compensation payment.
The Repatriation Commission policy decision refers only to “party-party” costs. The Commission decision is that "party-party" costs are not to be regarded as being in the scope of the definition of compensation. Therefore specified "party-party" legal costs only can be excluded from a lump sum compensation payment received by an income support pensioner, disability compensation pensioner or war widow/er, when applying either the compensation offsetting or compensation recovery rules.
Where costs are not specifically noted (often where there has been a settlement), advice should be sought as to the amount included to cover costs. In seeking this advice a clear distinction must be made between “party-party” and “solicitor-client” costs.
For compensation offsetting purposes the party-party legal costs are subtracted from the lump sum compensation payment. The fortnightly equivalent of the balance is then calculated, based on the instructions and tables provided by the Australian Government Actuary.
Chapter 20 vs Chapter 19
Chapter 20 of the GARP is designed to specifically cover apportionment of the impairment when it is necessary for a given accepted condition, to compare an impairment derived from one table with an impairment derived from another table. and when two or more accepted conditions contribute to the impairment ratings from either table.
Although both Chapters 19 and 20 refer to apportionment, Chapter 19 should be used to identify partially contributing impairment in offsetting cases (as would be applied for impairment from non-accepted conditions).
Application of Chapter 19
If a person is being assessed for an initial payment of disability pension, or an application for increase, there is a requirement contained within chapter 19 of GARP [3] that any contribution to an impairment or incapacity that is attributable to another source (not entirely due to the effects of the accepted condition/s), that incapacity must be “apportioned off”, so that disability pension is only paid for the portion of the incapacity related to the VEA [3] conditions.
The operation of this chapter of GARP is imperative to the appropriate and lawful application of the offsetting provisions. If a veteran is suffering the same incapacity from more than one condition, and a portion of that incapacity is related to a non-accepted condition, the removal of that partially-contributing impairment also removes the requirement to offset any compensation that may have been received for that incapacity.
This chapter requires that if an impairment assessment for a veteran includes a contribution/s from a non-accepted condition (that being a condition that is not compensable under the VEA), then the delegate is required to use the available medical evidence to assess the relative contribution of that non-accepted condition, to reduce the impairment rating (and the resultant disability pension) accordingly.
The application of chapter 19 in the initial disability pension assessment is not undertaken by an offsetting delegate and is the responsibility of the claims assessor, based on relevant medical evidence and opinion. If applied in the right circumstances, the application of this chapter will remove the requirement to apply any compensation offsetting, as the person will not be receiving disability pension for the incapacity that the other source of compensation was received for. This ensures that the Department does not affect the person's pension entitlement more than once.
An example of this could be where a veteran has an accepted knee condition under the VEA [3], but received a WorkCover lump sum for a thigh injury a few years back. The two injuries share the same incapacity (loss of function in the leg), however, the overall incapacity rating assessed under Chapter 3 of GARP could be reduced using Chapter 19, to ensure that the person only receives for the portion of the incapacity related to their knee injury. If this is applied and the pension level reduced before initial payment, then there is no requirement to offset the lump sum received for the thigh, as the person is not receiving pension for that portion of the incapacity. This must always be based on relevant medical evidence and opinion.
The application of this chapter is more difficult when the person has dual eligibility under the VEA and the DRCA [3] for the same condition and has received a DRCA PI lump sum. The DRCA compensation has been received for the same incapacity as the disability pension, so therefore Chapter 19 could not logically be applied, as there is no portion of the incapacity that can be separated. In these situations, the only result is to apply the offsetting provisions.
Offsetting delegates must be mindful to analyse any referred cases that may potentially have Chapter 19 of GARP applied in the initial pension assessment, and if the apportioning off of the relevant contribution has not occurred, that the case is referred for review and recalculation to ensure that offsetting is not being applied in a case where Chapter 19 can remove the requirement to do so.
Guide to the Assessment of Rates of Veterans' Pensions.
Veterans' Entitlements Act 1986.
Veterans' Entitlements Act 1986.
Safety, Rehabilitation and Compensation Act 1988
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