Background
Susanne Jenkins experienced complications following knee replacement surgery that impaired her mobility. She entered the National Disability Insurance Scheme before later undergoing an above-knee amputation. She subsequently brought medical-negligence proceedings in the District Court of Western Australia, alleging delayed identification and treatment of a prosthetic joint infection. The proceedings settled under a deed without an admission of liability.
The National Disability Insurance Agency issued a recovery notice to the medical practitioner’s indemnifying insurer under s 111(2) of the National Disability Insurance Scheme Act 2013 (Cth). The notice addressed compensation of $296,810.33 to be paid to Jenkins. She argued that the settlement compensated her for pain, suffering and additional treatment caused by the delayed treatment of the infection, rather than for the amputation-related impairment for which she received NDIS supports. After internal review, the Administrative Review Tribunal affirmed the recovery decision, and Jenkins appealed to the Federal Court on questions of law.
The Court’s Holding
Justice Colvin held that the Agency may recover only an amount of compensation fixed in respect of a personal injury that caused, to any extent, the impairment for which the participant received NDIS supports. It is insufficient that compensation has some connection with an injury mentioned in the underlying claim or settlement. Where a lump-sum settlement covers both a qualifying injury and another personal injury, the Agency cannot recover the whole sum merely because part of it relates to the qualifying injury; the recoverable portion must be identified.
The Tribunal applied the wrong statutory approach by treating it as enough that the compensation was “to any extent” for the amputation. It failed to determine what personal injury the compensation was actually paid in respect of and whether all or only part of the relevant amount related to the amputation, as distinct from pain and suffering caused by the untreated infection. That error infected the Tribunal’s reasoning. The Court allowed the appeal, set aside the Tribunal’s decision, dismissed the Agency’s application to introduce further evidence, and remitted the matter for a fresh determination according to law. Costs were reserved.
Key Takeaways
- NDIS compensation recovery requires a demonstrated connection between the compensation paid and the particular personal injury that caused the supported impairment.
- The phrase “to any extent” describes how the personal injury must have caused the impairment; it does not permit recovery of an entire settlement merely because some part may relate to that injury.
- For a mixed lump-sum settlement, the decision-maker must identify the portion paid in respect of the qualifying personal injury before determining the recoverable amount.
Why It Matters
The decision limits the Agency’s ability to recover NDIS expenditure from undifferentiated personal-injury settlements. Pleadings and the general subject matter of litigation may be relevant, but they do not replace the statutory inquiry into what injury the settlement compensation was actually paid for.
Participants, insurers and practitioners negotiating settlements involving several injuries or heads of loss should clearly document the basis of the payment. If compensation covers both an impairment supported by the NDIS and a different personal injury, the Agency must identify the amount attributable to the former rather than treating the entire payment as recoverable.