We often receive emails and inquiries from injured workers about the unfortunate, but real fact, that after their long fight with workcover resulting in some monetary compensation, a (large) part of that compensation is simply taken away by Centrelink, leaving the injured worker with little compensation for their work injury, pain and suffering and economic loss…
If you are awarded a workcover payment, such as a settlement for pain and suffering and/or past and future economic loss, Centrelink is required by law to take workcover compensation payments into account when determining eligibility for most Centrelink payments.
The following story highlights that any injured worker who receives monetary compensation (eg. settlement) needs to seek sound financial advice before ‘spending’ their settlement money.
Perhaps Mr’s O’Farrell and Pearce will volunteer to live on workers compensation payments for 1 month? Or perhaps they can spend a week with Robbie and Jen Lawrence to gain a better understanding of what life is really like for severely injured workers and their families. At least most people who are unemployed have a chance of eventually finding long-term meaningful employment. Happy New Year? Lives will be destroyed when injured workers lose entitlements overnight.
A very brave and seriously injured worker, destitute and left to rot by our workcover system, most kindly shared his pleading and most enlightening letter he wrote to Centrelink to stop workcover insurers of defrauding injured workers. A great write-up, alias the very sad reality for so many injured workers in Australia.
In this interesting article, our friend and ally, Adelaide injury lawyer Mal Byrne, writes about how your injury compensation will affect your Centrelink payments. Basically, when the hardship is caused by work injuries from an accident and the injured party is entitled to a compensation payment, Centrelink has a right to recover some of the money that they have paid as income support since the accident from the injured party’s final compensation payment.
Workcover compensation payments and Centrelink
Centrelink exists to provide a financial safety net for people in times of hardship such as unemployment, illness, disability, or when a person cannot look for work because they have to stay at home and care for preschool children or a disabled adult. When the hardship is caused by injuries from an accident and the injured party is entitled to a compensation payment, Centrelink has a right to recover some of the money that they have paid as income support since the accident from the injured party’s final compensation payment. When the compensation claim is finalised the insurance company has to pay the recovery sum directly to Centelink first and then sends the balance to the injured party or their lawyer.
When will Centrelink be entitled to recover money?
There are two circumstances in which Centrelink is entitled to recover money from an injured party’s compensation.
1. If your compensation payment is arrears of wages or if you are receiving a lump sum payment of compensation, but there is an allowance in that lump sum for past and/or future loss of income.
2. If you have a debt to Centrelink such as an outstanding loan that you are repaying or an overpayment, Centrelink will recover the balance of that debt/loan from your compensation payment.
How does Centrelink calculate the amount that they will take from my compensation payment?
If your compensation payment consists of arrears of income maintenance for a set period of time, Centrelink will recover all of the money they have paid you as income support during that set period of time. For example, if your compensation payment is back pay of WorkCover for a three month period and totals $10,000 gross, and Centrelink paid you $3,000 in income support during this three month period, they will recover that full mount from your $10,000 and you will be left with a balance of $7,000 gross.
If you are receiving a lump sum payment of compensation, the calculation is more complex. Centrelink will divide the total amount of compensation including legal costs and medical expenses and Medicare by two. They will then divide the 50% compensation figure by average weekly earnings (at the moment $823.80). The answer that arises from that calculation will be the number of weeks’ payments that Centrelink will recover.
For example, if your compensation payment is a $100,000, the calculation would be as follows:
100,000 divided by two equals $50,000, divided by $823.80, equals 60.69 weeks.
In that circumstance, Centrelink will then go back to the date of your injury and then recover from your compensation payment all income maintenance payments that they have made for the first 61 weeks following the accident. If 61 weeks has not elapsed since the accident, Centrelink will recover the full amount of payments made since the accident and you will have to wait (if you are still not working) until the 61 weeks expires before you are entitled to claim Centrelink benefits again.
You should remember that the average weekly earnings figure that Centrelink use increased as that figure is adjusted by the Bureau of Statistics. Please note that Centrelink have a calculator on their website which you can use to calculate the amount that they will recover from your settlement. However, the amount will not be accurate as Centrelink assume for the purposes of the calculation that the person is getting full Centrelink benefits for the entire period from the date of the accident. In summary, it is a worst case scenario in that it will tell you the maximum amount that Centrelink can recover from your settlement, but not the actual amount that they will recover.
What types of income maintenance payments are recoverable?
Virtually all types of income maintenance payments are recoverable including unemployment benefits (Newstart), Disability Support Pension, Sickness Benefits and Parenting Allowance. The only benefit that is definitely not recoverable is the lump sum Family Tax Benefit payment. If your spouse or de facto (including same sex) partner also receives Centrelink benefits, their payments may also be taken into account.
After Centrelink recover money from my settlement, will I be entitled to Centrelink benefits?
Once Centrelink recover monies from your settlement, you will still be eligible for Centrelink benefits unless the amount of weeks recoverable from the accident has not yet expired. When Centrelink become aware that someone has or is about to receive compensation, they will send out letters and forms asking the person to advise them of all the details of the compensation. They will ask questions about what you intend to do with the compensation. If you invest the compensation and earn interest or an annuity from the compensation, the funds will be classed as income and may affect your entitlement to Centrelink benefits depending on the amount that you are earning.
It is essential that you take into account Centrelink recovery before you accept any offers of settlement from the insurer.
If you have any doubts about Centrelink recovery or your entitlement to Centrelink benefits after you receive your compensation money, contact your Solicitor!
If you are based in South Australia (Adelaide), consider contacting Consultant [popup url=’http://www.tgb.com.au/staff/mbyrne ‘] Mal Byrne [/popup] on (08) 8250 6668.
You may also be interested in Mal Byrnes previous article “My workcover claim has settled, so why does it take so long for the money to come”
In this interesting article, our new friend and ally, Adelaide (SA) based personal injury lawyer Mal Byrne outlines the process from the settlement of a workcover claim to receiving your compensation payment.
About injury lawyer Mal Byrne
Thanks to our superstar, “None”, we were fortunate enough to ‘bump’ into Mal Byrne on Twitter where he had posted that he was working on [popup url =’http://www.tgb.com.au/blog/my-claim-has-settled-so-why-it-taking-so-long-money-come ‘] his blog [/popup]regarding workcover claims and heart attacks; and we asked him whether he would be interested in “joining forces” with us for the benefit of injured workers – and Mal Byrne kindly agreed!
Mal Byrne is a Consultant personal injury lawyer at popup url= ‘http://www.tgb.com.au/ ‘ ]Tindall Gask Bentley (tgb) Lawyers [/popup] in Adelaide.
Please warmly welcome Mal Byrne as our new ally!
My workcover claim has settled, so why is it taking so long for the money to come?
Mal has kindly given us permission to reprint his interesting and very useful article. [popup url= ‘ http://www.tgb.com.au/blog/my-claim-has-settled-so-why-it-taking-so-long-money-come’]Click here view this article on Mal Byrne’s blog [/popup]
Having a workcover claim finalised by way of a Court decision or settlement is an enormous relief for the person suing. Unfortunately, that relief can sometimes turn to anger and frustration at the delay between settlement of the claim and receiving the settlement monies. There can be a number of reasons why there is a long delay between actually getting a deal or a judgment and receiving the monies. What I intend to do in this blog is go through the hoops that clients and their lawyers need to jump between getting ‘the deal’ and getting the monies.1.Finalising the matter in writing
Where a claim has settled out of Court between the injured party and the insurer, the claim is not formally settled until the terms of the deal are set down in a written document that is signed by all parties. Usually, insurance companies will require the person suing to sign a Deed of Agreement. There is no formal deal until both parties sign that Deed of Agreement.
If court proceedings have been filed, but you have settled your claim prior to trial, the deal will still have to be recorded in writing. Once again, that usually means both parties signing a Deed of Agreement. In some cases, the defendant’s/insurer’s lawyer will file the offer that the injured party has accepted with the court and then serve the offer on the injured party’s lawyer, who will then sign the offer and return it to the lawyer acting for the defendant’s insurer, who will then file it with the court. Once the court seals the document, the matter is finalised.
If you have gone to trial and the Judge has made a decision, that decision is the final recording of the outcome of the matter (unless it is appealed) and settlement can proceed.
In the WorkCover jurisdiction, there are several different ways by which matters can be finalised. If the matter is a dispute between yourself and the employer or the claims agent at the Workers Compensation Tribunal, and you have agreed to resolve the dispute on certain terms, the dispute will not be resolved until orders have been signed by all parties setting out the deal and those orders have been filed and sealed by the Tribunal.
With Section 43 claims for lump sum permanent impairment, payment cannot be made even if you have an agreement with the claims agent until the claims agent issues a decision setting out the Section 43 payment and 30 days have elapsed since the decision was made. The reason for this is that workers and employers both have 30 days in which to dispute a decision and the claims agent will not pay the monies until the agent is sure that no one is going to dispute the decision. This is the case even if you or your lawyer have agreed on the terms of the Section 43 decision with the claims agent.
If you have lodged a claim for Workers Compensation and/or awaiting a decision, you may have an entitlement to provisional payments while you are waiting on that decision. If you have not been on offered provisional payments and the claims agent then accept your claims, you will probably still have to wait 30 days before receiving your monies.
Sometimes in the WorkCover jurisdiction, a claims agent can delay in finalising payments of back pay of income maintenance because the calculation can be complex. The claims agent has to be satisfied that you have not earned monies from any alternative means during the period for which the agent is paying income maintenance such as in employment. If you have worked during the period for which you receive income maintenance, the claims agent will have to have details from your employer of all monies paid and for what periods in order to calculate the arrears. Interest also has to be paid on arrears and that calculation can be tedious. Nevertheless, even though the calculation might be difficult, the claims agent should be able to finalise the calculation within a reasonable period of time. If you are experiencing delays and think your claims manager is not acting reasonably, you can either ask your lawyer (if you have one) to chase the claims agent or contact the Complaints Department of the claims agent and ask them to expedite the process.2.Medicare
Commonwealth Law requires that Medicare is entitled to recover any monies it has paid for medical expenses from any lump sum payment of compensation. If you are represented by a lawyer, your lawyer will normally arrange for Medicare to send you a Claims History Statement in advance of the claim being finalised, or on a regular six monthly basis until the claim is finalised. A Claims History Statement is a list of all treatment items that Medicare has paid since the date of the injury. That means all treatment that you have received since the date of injury and not necessarily treatment for your injury. When you receive the document from your lawyer or Medicare directly, you should promptly go through it and mark off the items that you think relate to the compensation claim. At the back of the history statement is a statutory declaration that have you have to swear in front of a witness verifying the accuracy of the claims history statement. You should arrange to both complete the history statement and sign the declaration in front of your lawyer to ensure that it is done properly.
Please note that Medicare only require that you complete the form to the best of your memory. You are not required to meet with your doctor and go through every item on the history statement to see what items relate to your compensation claim.
Once Medicare receives the completed claims history statement, it will send out a Notice of Charge which sets out the amount that it will seek to recover from your settlement. If you have a lawyer, they will include that amount in your settlement proposal to ensure that it is paid in addition to other entitlements and not deducted. The Notice of Charge lasts for six months and will have to be redone if a claim is still not finalised, and repeated every six months until your claim is finalised.
If your claim finalises and you do not have a current Medicare Notice of Charge, the insurer will have to forward Medicare 10 percent of your settlement. Medicare will then send you a Claims History Statement for completion and deduct the amount of the Notice of Charge and refund you the difference between the 10% and that amount when the Claims History Statement is returned and processed. Sometimes it can take months for Medicare to process claims history statements which is why it is ideal to have a current Notice of Charge at the time your claim is finalised.3.Centrelink
Once again, Commonwealth Law requires that insurers are not allowed to pay an injured party’s compensation monies until Centrelink has provided a notice advising whether or not it is entitled to recover any monies from that settlement.
I refer you to my blog on[popup url=’http://www.tgb.com.au/blog/centrelink-and-compensation-payments ‘] how Centrelink treats compensation payments [/popup]if you want to know the “hows and whens”.
If Centrelink has an interest, it can take at least two to four weeks for them to provide a notice to the insurer. In my experience, getting a Centrelink clearance is usually the lengthiest part of the settlement to payment of monies process.4.Payment of the monies
Once all documentation has been signed, sealed and delivered and Centrelink has provided a recovery notice, the insurer has no further obstacles to paying the monies. However, that does not mean that monies will be paid within 24 hours. Usually, the Courts and most deeds will allow a 14 to 21 day period between receipt of the Centrelink notice and payment of the monies. If the monies are not paid by the expiry, interest will have to be paid. The speed with which insurers pay the monies varies from insurer to insurer. Much depends on the individual case manager involved at the insurer and how busy or efficient he or she is. Currently, both the Motor Accident Commission (Allianz) and Employers Mutual Limited have the facility to pay monies by electronic transfer either directly to your account or to your lawyer’s trust account if you are legally represented.
If your claim is a public liability or medical negligence claim, settlement monies can often take longer as some insurers will have a policy of only drawing their settlement cheques once a month. If you are lucky enough to receive your claim at just the right time, that means the cheque can come quickly once all clearances have been obtained, but it also means that it can take two to three weeks depending on when the cheque is requested.5.From the lawyer’s trust account to the client
Lawyers cannot give clients their settlement money until they can be sure that the monies they have received into their trust account either by cheque or electronic transfer have cleared. Monies received by electronic transfer usually clear immediately. Cheques take three working days to clear. When the monies have cleared, your lawyer will provide you with a trust account cheque for the balance of your settlement after legal fees and other unpaid bills (such as medical) have been paid. As you are receiving your settlement monies by cheque even if it is banked directly into your account, you will still have to wait another three working days for the lawyer’s trust account cheque to clear before you can draw on your settlement monies.
Overall, it can sometimes take six to eight weeks (or even longer) after settlement of your claim before you receive your settlement monies. Hence, you should not make any financial commitments until you have been handed the settlement cheque or it has been banked into your bank account. In my experience, Centrelink and insurance companies do not care that you have bought a car or signed a contract on a house or made any other financial commitment with the settlement monies ahead of time. You can get yourself into great legal difficulty (particularly if you start negotiating to buy houses) before you receive your settlement monies and it is always best to wait for the money to actually come before you make any commitments. There will always be another car or another house that fits the bill.
If you are located in South Australia and for assistance with your compensation claim, consider contacting Mal Byrne on (08) 8250 6668.
Thank you Mal Byrne for this most interesting and very resourceful article, much appreciated 🙂